Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?

a$.$ What is the depreciation base to use for the asset?

b$.$ What is the asset's useful life?

c$.$ What method of cost apportionment is best for this asset?

d$.$ What product or service is the asset related to$?$

Which of the following is a realistic assumption of the straight$-$line method of depreciation?

a$.$ The asset's economic usefulness is the same each year.

b$.$ The repair and maintenance expense is essentially the same each period.

c$.$ The rate of return analysis is enhanced using the straight$-$line method.

d$.$ Depreciation is a function of time rather than a function of usage.

For income statement purposes, depreciation is a variable expense if the depreciation method used is

a$.$ units$-$of$-$production.

b$.$ straight$-$line.

c$.$ sum$-$of$-$the$-$years'$-$digits.

d$.$ declining$-$balance.

If an industrial firm uses the units$-$of$-$production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

a$.$ be constant.

b$.$ vary with unit sales.

c$.$ vary with sales revenue.

d$.$ vary with production.

Use of the double$-$declining balance method

a$.$ results in a decreasing charge to depreciation expense.

b$.$ means salvage value is not deducted in computing the depreciation base.

c$.$ means the book value should not be reduced below salvage value.

d$.$ all of these answers are correct.

A principal objection to the straight$-$line method of depreciation is that it

a$.$ provides for the declining productivity of an aging asset.

b$.$ ignores variations in the rate of asset use.

c$.$ tends to result in a constant rate of return on a diminishing investment base.

d$.$ gives smaller periodic write$-$offs than decreasing charge methods.

When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to

a$.$ charge a full year's depreciation to the year of acquisition.

b$.$ determine depreciation expense for the full year and then prorate the expense between the two periods involved.

c$.$ use the straight$-$line method for the year in which the asset is sold or otherwise disposed of$.$

d$.$ use a salvage value equal to the first year's partial depreciation charge.

Depreciation is normally computed on the basis of the nearest

a$.$ full month and to the nearest cent.

b$.$ full month and to the nearest dollar.

c$.$ day and to the nearest cent.

d$.$ day and to the nearest dollar.

McDonald Company acquired machinery on January $1,2009$ which it depreciated under the straightline method with an estimated life of fifteen years and no salvage value. On January $1,2014,$ McDonald estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by McDonald?

a$.$ As a prior period adjustment

b$.$ As the cumulative effect of a change in accounting principle in $2014$

c$.$ By setting future annual depreciation equal to one$-$sixth of the book value on January $1,2014$

d$.$ By continuing to depreciate the machinery over the original fifteen year life

A change in estimate should

a$.$ result in restatement of prior period statements.

b$.$ be handled in current and future periods.

c$.$ be handled in future periods only.

d$.$ be handled retroactively.