Deck 17: Depreciation

Question 1

Magnotti Floors purchased a floor sander for $3,550. Delivery costs totaled $225. The salvage value is $755 after 8 years. Using the straight-line depreciation method, calculate the book value at the end of year 5.

A) $1,662.50
B) $1,887.50
C) $2,412.50
D) $935.50

Answer 1

$1,887.50

Question 2

The Accelerated Cost Recovery System (ACRS) applies to property first used after ____________________.

Answer 2

1986

Question 3

The price of a public address system purchased by a local town hall was $42,500. It cost $2,100 for delivery. The salvage value at the end of 4 years is $7,500. Using the straight-line depreciation method, calculate the annual depreciation for year 3.

A) $9,324.50
B) $10,365.75
C) $11,368.20
D) $9,275.00

Answer 3

$9,275.00

Question 4

The price of a large piece of construction equipment purchased by Hass Construction Company was $53,500. It cost $1,275 for delivery and $2,750 for installation. The salvage value at the end of a 4-year life is $7,500. Using the straight-line depreciation method, calculate the annual depreciation for year 3.

A) $15,925.26
B) $22.301.33
C) $12,506.25
D) $13,501.87

Question 5

When the useful life of an asset is more accurately defined in terms of how much it is used rather than the passage of time, the ____________________ method is used to calculate depreciation.

Question 6

A bulldozer purchased by Miner Corporation is expected to last 7 years. The purchase price was $23,800. Shipping costs were $266 and initial setup charges were $393. The trade-in value is $2,204. Using the straight-line depreciation method, calculate the accumulated depreciation at the end of year 3.

A) $12,611.37
B) $9,537.86
C) $9,937.32
D) $8,833.87

Question 7

The cost write-off of long-lived assets is known as ____________________.

Question 8

The ____________________ of an asset is the original cost minus accumulated depreciation.

Question 9

Growth Industries purchased a generator for $40,500. Delivery costs totaled $1,424 and handling costs were $2,626. The useful life is 6 years and the salvage value is $12,020. Using the straight-line depreciation method, calculate the book value at the end of year 4.

A) $15,860.65
B) $21,686.68
C) $22,863.32
D) $37,713.33

Question 10

Plethora Farms purchased a greenhouse for $52,700. Delivery costs totaled $1,825 and handling costs were $3,000. The useful life is 10 years and the salvage value is $14,050. Using the straight-line depreciation method, calculate the book value at the end of year 4.

A) $31,256
B) $58,000
C) $22,000
D) $40,135

Question 11

The ____________________ method for calculating depreciation provides for equal periodic charges to be written off over the estimated useful life of the asset.

Question 12

____________________ is the proportional allocation of the cost of natural resources to the units used up or depleted per accounting period.

Question 13

The useful life of an asset is estimated by the length of time it is expected to generate ____________________.

Question 14

The number of years allowed under ACRS and MACRS to depreciate the cost of the asset is known as the ____________________ period.

Question 15

The sum-of-the-years' digits and declining-balance methods of calculating depreciation are called ____________________ depreciation methods.

Question 16

Clear Restorations purchased a floor machine for $10,520. Delivery costs totaled $1,250. The salvage value is $1,350 after 8 years. Using the straight-line depreciation method, calculate the book value at the end of year 5.

A) $1,302.50
B) $5,257.50
C) $6,512.50
D) $7,525.50

Question 17

A paper shredder purchased by Value Choice Electronics is expected to last 5 years. The purchase price was $3,943. Shipping costs were $150 and initial setup charges were $157. The trade-in value is $395. Prepare a depreciation schedule using the sum-of-the-year's method, then enter the accumulated depreciation at the end of year 4 as your answer.

A) $2,997
B) $649
C) $257
D) $3,598

Question 18

____________________ balance is the name given to the declining-balance method of depreciation when the straight-line multiple is 200%.

Question 19

A Dodge Ram delivery truck purchased by Fresh Flowers is expected to last 3 years. The purchase price was $75,300. Shipping costs were $2,960. The trade-in value is $9,836. Prepare a depreciation schedule using the straight-line method, then enter the accumulated depreciation at the end of year 2 as your answer.

A) $35,684
B) $37,644
C) $51,576
D) $45,616

Question 20

The name given to tax rules for getting back or recovering through depreciation deductions the cost of property used in a trade or business, or to produce income is known as the ____________________ Accelerated Cost Recovery System.

Question 21

The price of a High Definition TV purchased by Scranton High School was $2,034. It cost $100 for delivery and $175 for installation. The salvage value at the end of a 5-year life is $250. Using the sum-of-the-years' digits depreciation, calculate the annual depreciation for year 4.

A) $274.53
B) $582.34
C) $212.18
D) $674.09

Question 22

A computer system purchased by Jones Company cost $45,900. Using the MACRS method, calculate the accumulated depreciation at the end of year 3. (Round all dollar amounts to the nearest cent)

A) $30,339.20
B) $32,680.80
C) $33,529.81
D) $36,700.00

Question 23

The price of a corporate car purchased by Wright & Company was $33,200. Its salvage value after operating for 120,000 miles is $3,200. Using the units-of-production method, given the annual usage information, calculate the annual depreciation for year 5. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l } \text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \\\hline 1 & 23,026 & 2 & 27,683 \\3 & 22,509 & 4 & 28,200\end{array}$$

A) $2,988.00
B) $4,645.50
C) $6,985.50
D) $7,845.50

Question 24

Sutton Fabricators purchased 50 executive desks for $3,500. Delivery costs totaled $98 and handling costs were $59. The salvage value is $375 after 5 years. Using the double-declining-balance method, calculate the book value at the end of year 2. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $877.68
B) $2,340.48
C) $1,316.52
D) $789.91

Question 25

A drilling rig purchased by Challenge Industries should last 7 years. The purchase price was $82,500. Shipping costs were $1,567. The trade-in value is $17,870. Prepare a depreciation schedule using the 150% declining balance method, then enter the accumulated depreciation at the end of year 6 as your answer. (Round the declining balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $64,289.74
B) $56,740.29
C) $81,064.61
D) $75,823.19

Question 26

The price of machining equipment purchased by Brass Industries was $45,800. It cost $3,460 for initial setup. The salvage value at the end of 5 years is $6,700. Using the double-declining-balance depreciation method, calculate the annual depreciation of year 2. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $10,734.40
B) $18,112.00
C) $11,822.40
D) $12,376.00

Question 27

Protection Inc. purchased a fireproof safe for $3,850. Delivery costs totaled $134. The salvage value is $924 after 7 years. Using the 125% declining-balance depreciation method, calculate the book value at the end of year 1. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $1515.08
B) $3,272.46
C) $2,945.83
D) $2,285.70

Question 28

The price of a concrete pump purchased by Dolan Pumping was $42,500. It cost $1,200 for delivery. The salvage value at the end of 7 years is $7,200. Using the 150% declining-balance depreciation method, calculate the book value at the end of year 2. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $26,977.08
B) $28,674.66
C) $24,626.48
D) $27,572.44

Question 29

Summer leisure Unlimited purchased a color laser printer for $1,194. Delivery costs totaled $47 and handling costs were $77. The useful life is 5 years and the salvage value is $298. Using the sum-of-the-years' digit depreciation method, calculate the book value at the end of year 2.

A) $408
B) $582
C) $612
D) $706

Question 30

A slide projector purchased by Cobin Industries is expected to last 7 years. The purchase price was $13,780. The trade-in value is $2,300. Using the sum-of-the-years' digits depreciation method, calculate the accumulated depreciation at the end of year 3.

A) $4,921.43
B) $7,380.00
C) $8,858.57
D) $6,400.00

Question 31

The price of a corporate limo purchased by Bob's Limos was $42,900. Its salvage value after operating for 90,000 miles is $5,577. Based on the given annual usage, prepare a UOP (Units-of-Production) depreciation schedule, then enter the annual depreciation for year 5 as your answer. (Round all amounts to the nearest cent) $$\begin{array} { l l } \text { Years } & \text { Miles } \\\hline 1 & 17,175 \\2 & 22,264 \\3 & 21,840 \\4 & 19,508 \\5 & 25,233 \\\hline\end{array}$$

A) $10,597.86
B) $8,831.55
C) $3,821.98
D) $6,788.32

Question 32

The price of a laser printer purchased by Paul's Printers and Office Supplies was $713. It cost $27 for delivery. The salvage value at the end of a 5-year life is $65. Prepare a depreciation schedule using the sum-of-the-year's method, then enter the accumulated depreciation at the end of year 4 as your answer.

A) $592
B) $630
C) $668
D) $496

Question 33

Valentine Corp purchased a refrigerated truck for $22,000. Its useful life is estimated as 85,000 miles, with a salvage value of $2,420. Using the UOP depreciation method, given the annual usage information, calculate the book value at the end of year 3. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l } \text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \\\hline 1 & 17,105 & 2 & 15,585 \\3 & 18,436 & 4 & 20,717\end{array}$$

A) $4,240.28
B) $11,758.98
C) $10,241.02
D) $4,764.91

Question 34

Lazer Incorporated purchased a delivery van for $29,000. Its useful life is estimated as 5 years, with a salvage value of $2,000. Using the sum-of-the-years' digits depreciation method, calculate the book value at the end of year 3.

A) $5,400
B) $7,400
C) $12,800
D) $21,600

Question 35

A cargo van purchased by Airport Carriers should last 3 years. The purchase price was $70,800. Shipping costs were $1,557. The trade-in value is $5,412. Prepare a depreciation schedule using the double declining balance method, then enter the accumulated depreciation at the end of year 2 as your answer. (Round the declining balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $64,318.94
B) $48,240.41
C) $62,949.05
D) $47,223.60

Question 36

The price of a telescope purchased by Future Labs Inc. was $32,100. It cost $898 for delivery. The salvage value at the end of 3 years is $6,764. Using the 150% declining-balance depreciation method, calculate the annual depreciation for year 2. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

A) $16,499.00
B) $8,249.50
C) $24,748.50
D) $6,764.00

Question 37

A utility vehicle purchased by Knox Industries should last 110,000 miles. The acquisition cost was $21,400 and the salvage value is $1,926. Using the UOP depreciation method, given the annual usage information, calculate the accumulated depreciation at the end of year 2. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l } \text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \\\hline 1 & 22,029 & 2 & 22,724 \\3 & 23,420 & 4 & 23,188\end{array}$$

A) $7,922.99
B) $4,090.32
C) $13,344.46
D) $4,215.60

Question 38

An industrial size heavy duty printer purchased by The Awesome Print Shop Inc. should last 14,000 hours. The acquisition cost was $12,100 and the salvage value is $1,954. Prepare a UOP (Units-of-Production) depreciation schedule given the annual usage information, then enter the accumulated depreciation at the end of year 4 as your answer. (Round all amounts to the nearest cent) $$\begin{array} { l l } \text { Years } & \text { Hours } \\\hline 1 & 2,804 \\2 & 2,746 \\3 & 2,289 \\4 & 2,403 \\5 & 4,062 \\\hline\end{array}$$

A) $7,422.48
B) $3,922.40
C) $10,525.06
D) $7,234.79

Question 39

A fleet of limousines purchased by Hurst Industries is expected to last 5 years. The purchase price was $1,101,406. Shipping costs were $24,230 and initial setup charges were $37,447. The trade-in value is $77,098. Using the sum-of-the-years' digits depreciation method, calculate the accumulated depreciation at the end of year 2.

A) $651,591
B) $511,492
C) $289,596
D) $868,788

Question 40

The price of a desktop computer purchased by Alpha Electronics was $5,034. It cost $189 for delivery and $256 for installation. The salvage value at the end of a 5-year life is $424. Using the sum-of-the-years' digits depreciation, calculate the annual depreciation for year 4.

A) $337
B) $582
C) $596
D) $674

Question 41

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation:

Question 42

Santander Fuels purchased a new tank for $265,000. It is expected to last for 5 years and have a salvage value of $25,000. Using the sum-of-the-years' digits method, prepare a depreciation schedule for Santander Fuels.
Santander Fuels
Tank-SYD Depreciation Schedule

Question 43

A parcel of land purchased by Clean Energy, Inc. is estimated to contain 15.25 million tons of anthracite coal. The purchase price was $10,850,000, startup costs were $3,411,000, and the residual value is $1,464,000. If 2,325,000 tons were produced during the year, find the annual depletion cost. (Round depletion cost per unit to the nearest cent)

A) $1,437,850
B) $2,476,143
C) $2,318,644
D) $1,951,018.03

Question 44

The price of a railroad car purchased by Rio Corporation was $78,600. Using the MACRS method, calculate the annual depreciation for year 3. (Round all dollar amounts to the nearest cent)

A) $34,371.78
B) $19,249.14
C) $13,747.14
D) $9,817.14

Question 45

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 46

Complete the schedule as it relates to the declining-balance method of depreciation:

Question 47

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation:

Question 48

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 49

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 50

Rust Industries purchased a wood pulp mixer for $30,000. Using the MACRS method, calculate the book value at the end of year 3. (Round all dollar amounts to the nearest cent)

A) $13,119.00
B) $5,247.00
C) $9,372.00
D) $3,747.00

Question 51

Interior Resources purchased land for $14,092,000, which their experts believe to contain 27.1 million tons of tar sands. It costs $3,143,000 to develop the property, whose residual value is estimated at $986,000. Determine the current year depletion expense if annual production amounted to 5,149,000 tons. (Round depletion cost per unit to the nearest cent)

A) $2,471,520
B) $3,087,310
C) $2,831,950
D) $3,398,340

Question 52

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation:

Question 53

The price of a railroad engine purchased by the Kenneth family for their business was $2,250. Prepare a depreciation schedule using the MACRS (Modified Accelerated Cost Recovery System) method and calculate the accumulated depreciation at the end of year 3. (Round all amounts to the nearest cent)

A) $393.53
B) $432.00
C) $258.12
D) $518.96

Question 54

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 55

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 56

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method.

Question 57

The German Bakery purchased a new oven for $86,000. The freight charges were $1,600 and installation amounted to $2,000. The oven is expected to last four years and have a salvage value of $6,600. Using the straight-line method of depreciation, prepare a depreciation schedule for this oven.
German Bakery
Depreciation Schedule
Straight-line Method

Question 58

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation:

Question 59

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation:

Question 60

A server computer purchased by Selectron, Inc. cost $1,483,400. Prepare a depreciation schedule using the MACRS (Modified Accelerated Cost Recovery System) method and calculate the accumulated depreciation at the end of year 3. (Round all amounts to the nearest cent)

A) $284,812.80
B) $890,040.00
C) $683,982.77
D) $1,056,180.80

Question 61

Complete the schedule as it relates to the declining-balance method of depreciation:

Question 62

Sundowner Inc. purchased a new drill press for $190,000 having a salvage value of $2,650. The machine is expected to have a useful life of 30,000 hours. Complete the depreciation schedule using the units-of-production method.
Sundowner Inc.
Depreciation Schedule, Units-of-Production
Drill Press−30,000 hours

Question 63

Fernando's Grocery purchased a new cooler for the produce department for $28,000. Shipping charges were $800 and installation charges amounted to $1,280. The cooler is expected to last for 6 years and have a trade-in value of $2,000. Max will use the straight-line method of depreciation.

A)What is the amount of accumulated depreciation after the second year?
B)What is the book value of the cooler after the fifth year?

Question 64

Complete the schedule as it relates to the declining-balance method of depreciation:

Question 65

Reese Hardware purchased a new industrial size tool maker for $19,600. Shipping charges were $300 and installation amounted to $480. The tool maker is estimated to have a 5 year life and a residual value of $1,000. Reese elects to use the sum-of-the years' digits method.

A)What is the depreciation rate fraction for year 1?
B)What is the amount of depreciation for year 2?

Question 66

Lackawanna Community College purchased a computer system for $12,730. Delivery costs totaled $300 and handling costs were $214. The useful life is 4 years and the salvage value $4,082. Prepare a depreciation schedule using the sum-of-the-year's method, then enter the book value at the end of year 3 as your answer.

Question 67

A metal-polishing machine purchased by Mike Steel, Inc. should last 3 years. The purchase price was $36,300. Shipping costs were $363 and initial setup charges were $726. The trade-in value is $11,024. Prepare a depreciation schedule using the 125% declining balance method, then enter the accumulated depreciation at the end of year 2 as your answer. (Round the declining balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

Question 68

Gracie Slick bought a new building for a total cost of $260,000. She is depreciating it over 40 years using the sum-of-the-years' digits method. What is the sum-of-the-years' digits depreciation rate fraction for year 15?

Question 69

Porter's Garage bought a new machine for $16,300. Shipping charges were $200 and the machine is expected to have a useful life of 4 years and a residual value of $1,500. Porter will use the 150% declining-balance method of depreciation.

A)What is the beginning book value?
B)What is the declining-balance rate? (Round to nearest tenth of a percent)

Question 70

Edelweiss Tours purchased a new tour bus for $36,000. Shipping charges were $1,800 and other costs associated with the bus amounted to $620. The bus is expected to last 4 years and has a residual value of $4,000. Lion elects to use the straight-line method of depreciation.

A)What is the amount of total depreciation?
B)What is the amount of the annual depreciation?

Question 71

Complete the schedule as it relates to the units-of-production method of depreciation (round to the nearest cent):

Question 72

Rock Industries purchased a piece of equipment for $171,500. The installation and shipping charges were $8,500. They expect the equipment to be used for 8 years and have no residual value. Rock Industries elects to use the sum-of-the-years' digits method of depreciation. What is the amount of accumulated depreciation by the end of the third year?

Question 73

World-Wide Corporation purchased a computer system for $45,500. Delivery costs totaled $1,550. The useful life is 5 years and the salvage value is $5,250. Prepare a depreciation schedule using the straight-line method, then enter the book value at the end of year 4 as your answer.

Question 74

Complete the schedule as it relates to the declining-balance method of depreciation:

Question 75

Hopen Manufacturing bought a new machine for $360,000. It is expected to last for 5 years and have a salvage value of $30,000. Prepare a depreciation schedule using the 200% declining-balance method for the machine.
Hopen Manufacturing
Depreciation Schedule-Machinery
5-year, 200% declining-balance

Question 76

Bent Tree Golf Club purchased a new fleet of golf carts for $92,900. They are expected to have a 10 year useful life and a trade-in value of $10,000. Using the 150% declining-balance method of depreciation, what is the book value at the end of the first year?

Question 77

Complete the schedule as it relates to the units-of-production method of depreciation (round to the nearest cent):

Question 78

Complete the schedule as it relates to the units-of-production method of depreciation (round to the nearest cent):

Question 79

Software Unlimited purchased a computer screen projector for $7,852. Delivery costs totaled $141 and handling costs were $196. The useful life is 5 years and the salvage value $1,334. Prepare a depreciation schedule using the sum-of-the-year's method, then enter the book value at the end of year 4 as your answer.

Question 80

Jay's Sport Shop purchased new shelving and display cases costing $48,000. The installation charges were $4,000 and they expect a residual value of $8,000 after 5 years. Jay will use the double-declining-balance method of depreciation.

A)What is the amount of total depreciation?
B)What will the book value of the cases be at the end of 5 years?