Question 1

Copyrights will depreciate.

Accepted Answer

A) True 
 B)False  False

Question 2

A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the declining-balance method at twice the straight-line rate, the book value at the end of year 2 is:

Accepted Answer

A) $35,000 
B) $22,000 
C) $12,600 
D) $33,000 
E) None of these 
A) $35,000 
B) $22,000 
C) $12,600 
D) $33,000 
E) None of these C

Question 3

What is the depreciation expense for the second year (straight-line method) using the following?

Accepted Answer

A) $14,500 
B) $13,500 
C) $3,375 
D) $3,275 
E) None of these 
A) $14,500 
B) $13,500 
C) $3,375 
D) $3,275 
E) None of these C

Question 4

ACRS came before MACRS.

Accepted Answer

A) True 
 B)False

Question 5

A depreciation schedule for partial years must cover at least three years.

Accepted Answer

A) True 
 B)False

Question 6

All assets that last longer than one year will be depreciated.

Accepted Answer

A) True 
 B)False

Question 7

The units-of-production method is based on the passage of time.

Accepted Answer

A) True 
 B)False

Question 8

Residual value is not used in calculating the depreciation expense per unit of product, miles driven, etc.

Accepted Answer

A) True 
 B)False

Question 9

Book value is:

Accepted Answer

A) Cost plus accumulated depreciation 
B) Cost minus accumulated depreciation 
C) Cost divided by accumulated depreciation 
D) Cost times accumulated depreciation 
E) None of these 
A) Cost plus accumulated depreciation 
B) Cost minus accumulated depreciation 
C) Cost divided by accumulated depreciation 
D) Cost times accumulated depreciation 
E) None of these

Question 10

Cost recovery using MACRS is calculated by:

Accepted Answer

A) Rate divided by cost 
B) Rate × cost 
C) Rate + cost 
D) Rate - cost 
E) None of these 
A) Rate divided by cost 
B) Rate × cost 
C) Rate + cost 
D) Rate - cost 
E) None of these

Question 11

Book value is cost plus accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation expense results in an indirect tax savings.

Accepted Answer

A) True 
 B)False

Question 13

Straight-line depreciation does not:

Accepted Answer

A) Use residual to calculate yearly depreciation 
B) Have a book value 
C) Accelerate depreciation 
D) Let the cost remain the same 
E) None of these 
A) Use residual to calculate yearly depreciation 
B) Have a book value 
C) Accelerate depreciation 
D) Let the cost remain the same 
E) None of these

Question 14

A new truck costing $50,000 with a residual value of $4,000 has an estimated useful life of five years. Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

Accepted Answer

A) $20,000 
B) $12,000 
C) $18,000 
D) $7,200 
E) None of these 
A) $20,000 
B) $12,000 
C) $18,000 
D) $7,200 
E) None of these

Question 15

If a car is depreciated in four years, the rate of depreciation using twice the straight-line rate is:

Accepted Answer

A) 25% 
B) 50% 
C) 100% 
D) 75% 
E) None of these 
A) 25% 
B) 50% 
C) 100% 
D) 75% 
E) None of these

Question 16

Physical deterioration is related to an asset's estimated amount of usefulness.

Accepted Answer

A) True 
 B)False

Question 17

A company using the straight-line method over 10 years would be depreciating its asset at a 10% rate each year.

Accepted Answer

A) True 
 B)False

Question 18

Cost minus residual divided by number of years equals depreciation expense taken each year in the straight-line method.

Accepted Answer

A) True 
 B)False

Question 19

Which method does not deduct residual value in calculating depreciation expense?

Accepted Answer

A) Straight-line method 
B) Units-of-production method 
C) Declining-balance method 
D) None of these 
E) None of these. 
A) Straight-line method 
B) Units-of-production method 
C) Declining-balance method 
D) None of these 
E) None of these.

Question 20

MACRS does not use residual value; thus, assets are depreciated to zero.

Accepted Answer

A) True 
 B)False

Exam 17: Appreciation

Copyrights will depreciate.

A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the declining-balance method at twice the straight-line rate, the book value at the end of year 2 is:

What is the depreciation expense for the second year (straight-line method) using the following?

ACRS came before MACRS.

A depreciation schedule for partial years must cover at least three years.

All assets that last longer than one year will be depreciated.

The units-of-production method is based on the passage of time.

Residual value is not used in calculating the depreciation expense per unit of product, miles driven, etc.

Book value is:

Cost recovery using MACRS is calculated by:

Book value is cost plus accumulated depreciation.

Depreciation expense results in an indirect tax savings.

Straight-line depreciation does not:

A new truck costing $50,000 with a residual value of $4,000 has an estimated useful life of five years. Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

If a car is depreciated in four years, the rate of depreciation using twice the straight-line rate is:

Physical deterioration is related to an asset's estimated amount of usefulness.

A company using the straight-line method over 10 years would be depreciating its asset at a 10% rate each year.

Cost minus residual divided by number of years equals depreciation expense taken each year in the straight-line method.

Which method does not deduct residual value in calculating depreciation expense?

MACRS does not use residual value; thus, assets are depreciated to zero.

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