Exam 13: Methods of Depreciation

A tractor costing $20,000 is depreciated using the Modified Accelerated Cost Recovery System (MACRS). The tractor belongs to 3-year property class and the depreciation rate for Year 1 is 33.33%, for Year 2 is 44.45%, for Year 3 is 14.81%, and for Year 4 is 7.41%. The depreciation expense for Year 3 is:

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Question 1

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A conveyor belt has a useful life of 3 years, book value of $2,000 at the end of Year 2, and a trade-in value of $1,500. The conveyor belt is depreciated using the double-declining-balance method. If the accelerated depreciation rate is 40%, compute the depreciation expense for Year 3.

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Question 2

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Depreciation expense using the accelerated depreciation rate = Book value at the end of Year 2 × Accelerated depreciation rate = $2,000 × 40% = $800
The trade-in value of the belt is higher than the book value at the end of Year 3. So, for Year 3, an adjustment must be made limiting the depreciation expense to $500 (Book value of the belt − Trade-in value of the belt = $2,000 − $1,500 = $500).
Hence, the depreciation expense for Year 3 is $500.

Under the Modified Accelerated Cost Recovery System (MACRS), the _____ is ignored.

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Question 3

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Which of the following is true of depreciation expense calculated using the straight-line method?

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Question 4

The units-of-production method is useful when the utilization of an asset is fixed.

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Question 5

The accelerated method of depreciation allows smaller amounts of depreciation to be taken during the early life of an asset, and larger amounts to be taken during the later years of an asset's life.

(True/False)

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Question 6

The Modified Accelerated Cost Recovery System (MACRS) is a system of tax schedules established by the Federal Reserve System.

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Question 7

The _____ is an accelerated method of depreciation that allows larger amounts of depreciation to be taken in the early years of an asset's life.

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Question 8

Bronze Company purchased a furnace for $10,000. The life of the furnace is estimated to be 5 years, and its trade-in value at the end of 5 years is $4,000. The yearly depreciation for the furnace is _____.

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Question 9

Which of the following statements is true of the Modified Accelerated Cost Recovery System (MACRS)?

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Question 10

Which of the following is true of the double-declining-balance method?

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Question 11

Assume that the depreciation expense for a truck is $0.12 per mile calculated under the units-of-production method. The truck travels a total distance of 9,000 miles in Year 1. Which of the following is the depreciation expense for Year 1?

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Question 12

The _____ is a combination of the declining-balance and straight-line depreciation methods of computing depreciation.

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Question 13

Snowstone Company purchased an ice cream cone manufacturing machine for $20,000. The machine is estimated to have a useful life of 100,000 cones, and it is expected to have a trade-in value of $5,000. The machine's depreciation per unit is equal to:

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Question 14

The _____ calculates depreciation based on usage instead of the years of service anticipated.

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Question 15

The double-declining-balance method calculates depreciation on an asset at double the rate used in the:

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Question 16

Which of the following mathematical equations is used to calculate depreciation per unit under the units-of-production method of depreciation?

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Question 17

Zinc Corp. purchases a truck at the beginning of Year 1 at a cost of $16,500. The truck is estimated to have a useful life of 6 years and a trade-in value of $1,500. Assuming that Zinc Corp. uses the straight-line method of depreciation, the book value of the truck at the end of Year 1 is:

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Question 18

A water pump that costs $25,000 is depreciated using the double-declining-balance method. Which of the following is the depreciation expense for Year 1 if the depreciation rate as per straight-line method is 20%?

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Question 19

The straight line method allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.

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Question 20

Showing 1 - 20 of 20

A conveyor belt has a useful life of 3 years, book value of $2,000 at the end of Year 2, and a trade-in value of $1,500. The conveyor belt is depreciated using the double-declining-balance method. If the accelerated depreciation rate is 40%, compute the depreciation expense for Year 3.

Under the Modified Accelerated Cost Recovery System (MACRS), the _____ is ignored.

Which of the following is true of depreciation expense calculated using the straight-line method?

The units-of-production method is useful when the utilization of an asset is fixed.

The accelerated method of depreciation allows smaller amounts of depreciation to be taken during the early life of an asset, and larger amounts to be taken during the later years of an asset's life.

The Modified Accelerated Cost Recovery System (MACRS) is a system of tax schedules established by the Federal Reserve System.

The _____ is an accelerated method of depreciation that allows larger amounts of depreciation to be taken in the early years of an asset's life.

Bronze Company purchased a furnace for $10,000. The life of the furnace is estimated to be 5 years, and its trade-in value at the end of 5 years is $4,000. The yearly depreciation for the furnace is _____.

Which of the following statements is true of the Modified Accelerated Cost Recovery System (MACRS)?

Which of the following is true of the double-declining-balance method?

Assume that the depreciation expense for a truck is $0.12 per mile calculated under the units-of-production method. The truck travels a total distance of 9,000 miles in Year 1. Which of the following is the depreciation expense for Year 1?

The _____ is a combination of the declining-balance and straight-line depreciation methods of computing depreciation.

Snowstone Company purchased an ice cream cone manufacturing machine for $20,000. The machine is estimated to have a useful life of 100,000 cones, and it is expected to have a trade-in value of $5,000. The machine's depreciation per unit is equal to:

The _____ calculates depreciation based on usage instead of the years of service anticipated.

The double-declining-balance method calculates depreciation on an asset at double the rate used in the:

Which of the following mathematical equations is used to calculate depreciation per unit under the units-of-production method of depreciation?

Zinc Corp. purchases a truck at the beginning of Year 1 at a cost of $16,500. The truck is estimated to have a useful life of 6 years and a trade-in value of $1,500. Assuming that Zinc Corp. uses the straight-line method of depreciation, the book value of the truck at the end of Year 1 is:

A water pump that costs $25,000 is depreciated using the double-declining-balance method. Which of the following is the depreciation expense for Year 1 if the depreciation rate as per straight-line method is 20%?

The straight line method allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.

Asset, Liability, Owners Equity, Revenue, and Expense Accounts

T Accounts, Debits and Credits, Trial Balance, and Financial Statements

The General Journal and the General Ledger

Adjusting Entries and the Work Sheet

Closing Entries and the Post-Closing Trial Balance

Bank Accounts, Cash Funds, and Internal Controls

Employee Earnings and Deductions

Employer Taxes, Payments, and Reports

Sales and Purchases

Cash Receipts and Cash Payments

Work Sheet and Adjusting Entries

Financial Statements, Closing Entries, and Reversing Entries

Bad Debts

Inventory Methods

Notes Receivablenotes Payable

Filters

Exam 13: Methods of Depreciation

A conveyor belt has a useful life of 3 years, book value of $2,000 at the end of Year 2, and a trade-in value of $1,500. The conveyor belt is depreciated using the double-declining-balance method. If the accelerated depreciation rate is 40%, compute the depreciation expense for Year 3.

Under the Modified Accelerated Cost Recovery System (MACRS), the _____ is ignored.

Which of the following is true of depreciation expense calculated using the straight-line method?​

The units-of-production method is useful when the utilization of an asset is fixed.​

The accelerated method of depreciation allows smaller amounts of depreciation to be taken during the early life of an asset, and larger amounts to be taken during the later years of an asset's life.

The Modified Accelerated Cost Recovery System (MACRS) is a system of tax schedules established by the Federal Reserve System.

The _____ is an accelerated method of depreciation that allows larger amounts of depreciation to be taken in the early years of an asset's life.​

Bronze Company purchased a furnace for $10,000. The life of the furnace is estimated to be 5 years, and its trade-in value at the end of 5 years is $4,000. The yearly depreciation for the furnace is _____.

Which of the following statements is true of the Modified Accelerated Cost Recovery System (MACRS)?

Which of the following is true of the double-declining-balance method?

Assume that the depreciation expense for a truck is $0.12 per mile calculated under the units-of-production method. The truck travels a total distance of 9,000 miles in Year 1. Which of the following is the depreciation expense for Year 1?

The _____ is a combination of the declining-balance and straight-line depreciation methods of computing depreciation.

Snowstone Company purchased an ice cream cone manufacturing machine for $20,000. The machine is estimated to have a useful life of 100,000 cones, and it is expected to have a trade-in value of $5,000. The machine's depreciation per unit is equal to: ​

The _____ calculates depreciation based on usage instead of the years of service anticipated.

The double-declining-balance method calculates depreciation on an asset at double the rate used in the:

Which of the following mathematical equations is used to calculate depreciation per unit under the units-of-production method of depreciation?

Zinc Corp. purchases a truck at the beginning of Year 1 at a cost of $16,500. The truck is estimated to have a useful life of 6 years and a trade-in value of $1,500. Assuming that Zinc Corp. uses the straight-line method of depreciation, the book value of the truck at the end of Year 1 is:

A water pump that costs $25,000 is depreciated using the double-declining-balance method. Which of the following is the depreciation expense for Year 1 if the depreciation rate as per straight-line method is 20%?

The straight line method allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.​

Asset, Liability, Owners Equity, Revenue, and Expense Accounts

T Accounts, Debits and Credits, Trial Balance, and Financial Statements

The General Journal and the General Ledger

Adjusting Entries and the Work Sheet

Closing Entries and the Post-Closing Trial Balance

Bank Accounts, Cash Funds, and Internal Controls

Employee Earnings and Deductions

Employer Taxes, Payments, and Reports

Sales and Purchases

Cash Receipts and Cash Payments

Work Sheet and Adjusting Entries

Financial Statements, Closing Entries, and Reversing Entries

Bad Debts

Inventory Methods

Notes Receivablenotes Payable

Filters

Which of the following is true of depreciation expense calculated using the straight-line method?

The units-of-production method is useful when the utilization of an asset is fixed.

The _____ is an accelerated method of depreciation that allows larger amounts of depreciation to be taken in the early years of an asset's life.

Snowstone Company purchased an ice cream cone manufacturing machine for $20,000. The machine is estimated to have a useful life of 100,000 cones, and it is expected to have a trade-in value of $5,000. The machine's depreciation per unit is equal to:

The straight line method allows a business to calculate an equal amount of depreciation expense for each year of service anticipated.