Deck 11: Depreciation, Impairment, and Disposition

Question 1

Which of the following is NOT a time-based depreciation method?

A) straight-line
B) units of production
C) double-declining balance
D) any diminishing balance method

Answer 1

units of production

Question 2

On January 1, 2019, Incredible Corp. purchased a new machine for $350,000. The new machine has an estimated useful life of eight years and the residual value was estimated to be $25,000. Depreciation was calculated using the double-declining-balance method. To the nearest dollar, what amount should be shown in Incredible's balance sheet at December 31, 2020, net of accumulated depreciation, for this machine?

A) $153,125
B) $175,000
C) $201,563
D) $196,875

Answer 2

$196,875

Question 3

Which of the following does NOT apply to the declining-balance method?

A) It results in a decreasing charge to depreciation expense.
B) Residual value is not deducted in calculating the depreciation base.
C) The book value should not be reduced below residual value.
D) In certain circumstances, the book value may be reduced below residual value.

Answer 3

In certain circumstances, the book value may be reduced below residual value.

Question 4

Deciding which PP&E components to depreciate separately is called

A) separate depreciation.
B) componentization.
C) group depreciation.
D) individual asset depreciation.

Question 5

Cassidy Corporation purchased factory equipment that was installed and put into service on January 2, 2019, at a total cost of $55,000. Residual value was estimated at $3,000. The equipment is being depreciated over four years using the double-declining-balance method. For the calendar year 2020, Cassidy should record depreciation expense on this equipment of

A) $27,500.
B) $52,000.
C) $13,750.
D) $13,000.

Question 6

On April 1, 2015, Ninja Ltd. purchased equipment for $120,000. The equipment was estimated to have a residual value of $15,000 and is being depreciated over ten years using the straight-line method. What should be the depreciation expense for this equipment for the year ended December 31, 2020?

A) $7,875
B) $8,000
C) $10,500
D) $12,000

Question 7

A machine has a cost of $24,000, a residual value of $6,000, and an estimated three-year life. If depreciation in the second year was $2,000, which depreciation method was used?

A) straight-line
B) double declining-balance
C) units of production
D) cannot tell from information given

Question 8

Which of the following is INCORRECT regarding depreciation?

A) It is not a matter of valuation.
B) It is part of the matching of revenues and expenses.
C) It is a means of cost allocation.
D) It is an attempt to reflect the fair market values of the related assets.

Question 9

An asset's useful life

A) remains unchanged once it has been determined.
B) is the same as its physical life.
C) is affected by physical and economic factors.
D) is not affected by physical and economic factors.

Question 10

If income tax effects are ignored, accelerated depreciation methods

A) provide funds for the earlier replacement of assets.
B) increase funds provided by operations.
C) tend to offset the effect of steadily increasing repair and maintenance costs on the income statement.
D) tend to decrease the current ratio.

Question 11

Depreciation commences or continues when

A) The asset has been paid for.
B) The asset is available for use.
C) The asset's fair value can be recovered.
D) The asset is taken out of service.

Question 12

Ella Inc. purchased machinery that was installed and ready for use on January 3, 2019, at a total cost of $460,000. Residual value was estimated at $60,000. The machinery will be depreciated over five years using the double-declining-balance method. For the calendar year 2020, Ella should record depreciation expense on this machinery of

A) $96,000.
B) $110,400.
C) $120,000.
D) $184,000.

Question 13

Factors to consider in the depreciation process do NOT include

A) the asset's depreciable amount.
B) the period over which to depreciate the asset.
C) the asset's fair market value.
D) which asset components should be depreciated separately.

Question 14

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.

Question 15

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

A) units of production.
B) straight-line.
C) increasing charge.
D) declining-balance.

Question 16

On January 3, 2018, City Corp. purchased machinery. The machinery has an estimated useful life of eight years and an estimated residual value of $67,500. City uses straight-line depreciation for all their machinery, and recorded $115,500 depreciation expense for 2020. The acquisition cost of the machinery was

A) $991,500.
B) $924,000.
C) $856,500.
D) $655,500.

Question 17

If a company uses the units of production method for calculating depreciation on its 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.

Question 18

Consider an asset that was separated into its main components (A, B, and C). The $1,200,000 purchase price was allocated to these components in equal proportions. The useful lives are 12, 4, and 7 years for components A, B, and C respectively. Components A and B are not expected to have any residual value, but Component C is expected to have a residual value of $18,000. Assuming straight-line depreciation, total annual depreciation expense, to the nearest dollar, relating to these assets is

A) $100,100.
B) $125,120.
C) $187,905.
D) $190,476.

Question 19

When the unit of production method of depreciation is used, which of the following best describes depreciation expense?

A) Depreciation expense will vary directly with output.
B) Depreciation expense will vary directly with sales.
C) Depreciation rate per unit will vary directly with output.
D) Depreciation rate per unit will vary directly with sales.

Question 20

A graph is set up with "yearly depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the graphs for straight-line and declining-balance depreciation, respectively, be drawn?

A) vertically and sloping down to the right
B) vertically and sloping up to the right
C) horizontally and sloping down to the right
D) horizontally and sloping up to the right

Question 21

On July 1, 2019, Boots Corporation purchased factory equipment for $200,000. Residual value was estimated to be $5,000. The equipment will be depreciated over ten years using the double-declining-balance method. Counting the year of acquisition as one-half year, Boots should record depreciation expense on this equipment for the calendar year 2020 of

A) $36,100.
B) $36,000.
C) $180,000.
D) $16,000.

Question 22

On January 1, 2015, Rabbit Corp. acquired machinery that it depreciated using the straight-line method with an estimated useful life of 15 years and no residual value. On January 1, 2020, Rabbit estimated that the remaining life of this machinery was six years with no residual value. This change should be accounted for

A) as a prior period adjustment.
B) as the cumulative effect of a change in accounting principle in 2020.
C) by setting future annual depreciation equal to one-sixth of the book value on January 1, 2020.
D) by continuing to depreciate the machinery over the original 15-year life.

Question 23

Changes in the depreciation rate are accounted for as a(n)

A) adjustment to current and future periods.
B) adjustment to the current period only.
C) adjustment to future periods only.
D) catch-up adjustment to prior periods.

Question 24

On January 3, 2013, Hippo Corp. purchased a machine for $600,000. The machine was being depreciated using the straight-line method over an estimated useful life of ten years, with no residual value. At the beginning of 2020, the company paid $150,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional five years (15 years total). The depreciation expense for 2020 should be

A) $41,250.
B) $50,000.
C) $60,000.
D) $66,000.

Question 25

When all or a portion of shareholders' capital investments are returned to them, this is called a

A) return dividend.
B) liquidating dividend.
C) stock dividend.
D) investment dividend.

Question 26

Consider an asset for which the following information is available: Carrying value at Dec 31, 2020 before depreciation 59,000
Calculated depreciation for2020................................$2,400
Original cost...............................................................$24,000
Reridual value............................................................$8,500
Remaining useful life..................................................3 years The depreciation expense for 2020 is

A) $3,100.
B) $3,000.
C) $2,400.
D) $500.

Question 27

Roan Corp. acquired a tract of land containing an extractable natural resource. The company is required by the government to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 6.2 million tonnes, and that the land will have a value of $1.2 million after restoration. Relevant cost information follows: Land.............................................. $\$ 8,000,000$
Estimated retoration costs.............. $2,100,000$ If Roan maintains no inventories, what is the depletion charge per tonne of extracted resource?

A) $1.00
B) $1.32
C) $1.44
D) $1.63

Question 28

On March 24, 2019, Dagger Ltd. purchased a new machine for $50,000. This machine has an eight-year estimated useful life, an estimated residual value of $2,500, and is expected to produce 95,000 units over its useful life. The machine produced 5,500 units in 2019 and 6,500 units in 2020. Using the unit of production method, to the nearest dollar, the related Accumulated Depreciation account on the adjusted trial balance at December 31, 2020 would be

A) $6,500.
B) $6,316.
C) $6,000.
D) $3,250.

Question 29

In 2020, Elk Corporation purchased a mine for $200 million (of this, $30 million was applicable to the land). An independent evaluation estimated the mine's reserves at 7.5 million tonnes. During 2020, Elk extracted 900,000 tonnes. Elk's depletion expense for 2020 is

A) $200,000.
B) $18,000,000.
C) $20,400,000.
D) $24,000,000.

Question 30

On July 1, 2020, Eland Corp. purchased a machine for $375,000. The machine has an estimated useful life of five years and a residual value of $50,000. The machine is being depreciated using the double-declining-balance method. For the year ended December 31, 2020, Eland should record depreciation expense on this machine of

A) $65,000.
B) $75,000.
C) $130,000.
D) $150,000.

Question 31

On January 2, 2019, Urban Ltd. purchased equipment to be used in its manufacturing operations. The equipment has an estimated useful life of ten years, and an estimated residual value of $33,000. It was also estimated that the equipment would be used a total of 63,000 hours over its useful life. The depreciation expense for this equipment was $156,000 for calendar 2020, using the units of production method. The machine was used for 7,500 hours in 2020. The acquisition cost of the equipment was

A) $1,587,600.
B) $1,527,000.
C) $1,066,200.
D) $1,343,400.

Question 32

On April 10, 2019, Rio Corp. purchased machinery for $180,000. Residual value was estimated at $4,000. The machinery will be depreciated over ten years using the straight-line method. If depreciation is calculated on the basis of the nearest full month, the related Accumulated Depreciation account at December 31, 2020 will be

A) $31,500.
B) $30,800.
C) $30,000.
D) $29,333.

Question 33

Swallow Ltd. takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of disposition. Data relating to one of Swallow's pieces of equipment at December 31, 2019, are as follows: Acquisition year...........................2017
Cost..............................................$280,000
Residual value..............................40,000
Accumulated depreciation............219,520
Estimated useful life.....................5 years Using the same depreciation method that was used in 2017, 2018, and 2019, how much depreciation expense should be recorded in 2020 for this asset?

A) $60,480
B) $48,000
C) $32,000
D) $20,480

Question 34

On April 1, 2018, Chickadee Corp. purchased new machinery for $400,000. The machinery has an estimated useful life of ten years, a residual value of $20,000, and depreciation is calculated using the double-declining-balance method. Chickadee's year end is December 31. The accumulated depreciation on this machinery at March 31, 2020, should be

A) $102,500.
B) $131,200.
C) $141,600.
D) $182,400.

Question 35

On July 1, 2017, Puppy Corp. purchased a machine for $500,000. The machine was estimated to have a useful life of ten years with an estimated residual value of $28,000. During 2020, it became apparent that the machine would become uneconomical after December 31, 2021, and that the machine would have no salvage value. Accumulated depreciation on this machine at December 31, 2019, was $118,000, using the straight-line method. The depreciation expense for 2020 should be

A) $95,500.
B) $82,000.
C) $76,400.
D) $191,000.

Question 36

The most common method of recording depletion for accounting purposes is the

A) single-declining method.
B) double-declining method.
C) straight-line method.
D) units of production method.

Question 37

On September 25, 2019, Panther Corp. purchased machinery for $336,000. Residual value was estimated to be $15,000. The machinery will be depreciated over eight years using the double-declining-balance method. If depreciation is calculated on the basis of the nearest full month, Panther should record depreciation expense for calendar 2020 on this machinery of

A) $78,750.
B) $63,000.
C) $60,000.
D) $42,000.

Question 38

In January, 2020, Camel Corporation purchased a mine for $2,550,000 with removable ore estimated by geological surveys at 1 million tonnes. The property has an estimated (residual) value of $150,000 after the ore has been extracted. The company incurred $750,000 in development costs preparing the mine for production. During 2020, 250,000 tonnes were removed and 200,000 tonnes were sold. What is the amount of depletion that Camel should expense for 2020?

A) $480,000
B) $600,000
C) $787,500
D) $840,000

Question 39

Depletion expense

A) is usually part of cost of goods sold.
B) includes tangible equipment costs in the depletion base.
C) excludes intangible development costs from the depletion base.
D) excludes restoration costs from the depletion base.

Question 40

On May 1, 2011, Platypus Ltd. purchased a new machine for $132,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated residual value of $6,000. The company has recorded monthly depreciation using the straight-line method. On March 1, 2020, the machine was sold for $18,000. The loss to be recognized from the sale is

A) $0.
B) $2,700.
C) $6,000.
D) $8,700.

Question 41

Which of the following best describes the concept of cash-generating units (CGU)?

A) Their cash flows are dependent on those of other CGU's.
B) The individual assets that are included in the CGU do not generate cash flows on their own.
C) A CGU is the largest identifiable group of assets that generates cash inflows predominantly independent from other CGUs.
D) IFRS does not recognize the concept of cash-generating units (CGU).

Question 42

The following information is available for an asset that is classified as held for sale: Accumulated depreciation (at March 31, 2020)..........................$24,3000
Acrat cost......................................................................................50,000
If the asset were sold on April 1, 2020 for $27,600, there would be

A) a loss of $1,900.
B) a gain of $1,400.
C) a gain of $1,900.
D) a loss of $22,400.

Question 43

On January 1, 2010, Antelope Ltd. purchased a building for $800,000. At this time, the building had an estimated residual value of $300,000 and an estimated useful life of 20 years. The company has recorded monthly depreciation using the straight-line method. On January 1, 2020, it is decided to put the building up for sale for $1,200,000. At December 31, 2020, the building is still for sale. The correct depreciation to record for 2020 is

A) $0.
B) $25,000.
C) $40,000.
D) $60,000.

Question 44

For a company that uses ASPE, the required year-end journal entry to record an impairment loss includes

A) a debit to Loss on Impairment and a credit to Accumulated Impairment Losses.
B) a debit to Other Comprehensive Income and a credit to Accumulated Impairment Losses.
C) a debit to Loss on Impairment and a credit to the related asset.
D) a debit to Other Comprehensive Income and a credit to the related asset.

Question 45

The rational entity impairment model

A) does not allow the reversal of previously recognized impairment losses.
B) is the method used under ASPE.
C) uses undiscounted cash flows in its determination of impairment.
D) compares the asset's carrying value with its recoverable amount.

Question 46

The cost recovery impairment model

A) uses undiscounted cash flows in its determination of impairment.
B) uses discounted cash flows in its determination of impairment.
C) is the method used under IFRS.
D) requires the calculation of value in use.

Question 47

Long-lived assets that are held for sale

A) continue to be depreciated.
B) are carried at the higher of book value and fair values less costs of disposal.
C) are generally not re-measured at each balance sheet date.
D) are reported separately from other assets.

Question 48

IFRS require that assets must be assessed for indications of impairment

A) at the end of every quarter.
B) at the end of each reporting period.
C) when events and circumstances indicate that asset's carrying amount may not be recoverable.
D) whenever the method of depreciation has changed.

Question 49

On June 1, 2018, Morgan Manufacturing acquired a machine for $100,000 with an estimated useful life of five years and an estimated residual value of $10,000. The company uses the double-declining-method of depreciation and takes a full year's depreciation in the year of acquisition and none in the year of disposition. If the machine were disposed of for $16,000 on May 1, 2020, the loss on disposal would be

A) $20,000.
B) $26,400.
C) $24,000.
D) $36,000.

Question 50

Depreciation should be discontinued when an asset has been

A) derecognized or taken out of service.
B) derecognized or classified as held for sale.
C) taken out of service.
D) taken out of service or classified as held for sale.

Question 51

Golden Goose Corp. has a piece of equipment, which is being held for sale, and has a carrying value of $100,000. When the decision to sell had been made, the equipment had been written down from a carrying value of $180,000. At December 31, 2020, it is estimated that the fair value less disposal costs (net realizable value) is $130,000. For the calendar year 2020, Golden Goose should recognize a recovery (gain) of

A) $0.
B) $30,000.
C) $50,000.
D) $80,000.

Question 52

ASPE requires that assets must be assessed for indications of impairment

A) at the end of each reporting period.
B) at the end of every quarter.
C) when events and circumstances indicate that asset's carrying amount may not be recoverable.
D) whenever the method of depreciation has changed.

Question 53

On January 1, 2020, the Accumulated Depreciation-Machinery account of Bonobo Corp. showed a balance of $760,000. At the end of 2020, after the adjusting entries were posted, it showed a balance of $820,000. During 2020, one of the machines that cost $240,000 was sold for $118,000 cash. This resulted in a loss of $7,000. Assuming that no other assets were disposed of during the year, depreciation expense for 2020 was

A) $189,000.
B) $182,000.
C) $180,000.
D) $175,000.

Question 54

During 2020, Jersey Ltd. sold equipment that had originally cost $206,000 for $127,600. This resulted in a gain of $9,600. The balance in the Accumulated Depreciation-Equipment was $660,000 on January 1, 2020, and $630,000 on December 31, 2020. No other equipment was disposed of during 2017. Depreciation expense for 2020 was

A) $20,000.
B) $58,000.
C) $59,600.
D) $101,000.

Question 55

One of Spade Corp.'s assets was expropriated by government authorities. The following additional information is available: Book value at the time of expropriation..................$600,000
Cash received.......................................................... $\$ 1,500,000$ Under ASPE, this situation would be reflected in the company's financial statements as a $900,000

A) gain that would be included in other comprehensive income.
B) gain that would be included in net income.
C) gain from discontinued operations.
D) gain that would appear on the statement of shareholders' equity.

Question 56

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

A) less than book value.
B) greater than cost.
C) greater than book value.
D) less than current market value.

Question 57

On January 1, 2012, Owl Corporation purchased equipment for $76,000, having a useful life of ten years and an estimated residual value of $4,000. Owl has recorded monthly depreciation using the straight-line method. On December 31, 2020, the equipment was sold for $14,000. The gain to be recognized from the sale is

A) $14,000.
B) $6,800.
C) $2,800.
D) $0.

Question 58

Gibbon Corp., a Canadian public corporation, owns equipment for which the following year-end information is available: Carrying amount (book value)............$59,000
Recoverable amount.............................52,000
Fair value less disposal costs............. $\quad 55,000$ Which of the following best describes the proper accounting treatment for Gibbon's equipment?

A) It is not impaired and a loss should not be recognized.
B) It is impaired and a loss must be recognized, with no reversal possible.
C) It is not impaired, but a loss must be recognized.
D) It is impaired and a loss must be recognized, but the loss but may be reversed in future periods.

Question 59

Monkey Shines Ltd., a Canadian public corporation, owns equipment for which the following year-end information is available: Carrying amount (book value)........................... $\$ 120,000$
Value in use..........................................................102,000
Fairvalue less disposal costs...............................108,000 The recoverable amount to be used in the determination of impairment is

A) $102,000.
B) $108,000.
C) $120,000.
D) Cannot be determined from the information given.

Question 60

Which of the following is NOT likely to be an indicator of possible asset impairment?

A) evidence of obsolescence or physical damage
B) a significant decrease in the asset's market value
C) the book value of the entity's net assets is greater than the entity's market capitalization
D) costs incurred for asset acquisition or operation are significantly lower than originally expected

Question 61

Halcour Corporation acquired the right to mine a piece of land at a cost to lease of $600,000. The related excavation costs were $1,000,000, while developmental costs were an additional $8,000,000, all of which will contribute to Halcour extracting 25,000 tonnes. In the first year of operations Halcour mined and sold 5,000 tonnes, while in its second year the company extracted 6,500 tonnes but only sold 6,000 tonnes.
Instructions
Prepare the journal entry to record depletion expense for the first two years.

Question 62

The asset turnover ratio is calculated by dividing

A) net income by ending total assets.
B) net sales by average total assets.
C) net sales by ending total assets.
D) net income by average total assets.

Question 63

Use the following data for questions.
Wren Corp. reported the following data on its most recent financial statements:

Disclosures relating to PP&E assets are

A) identical under IFRS and ASPE.
B) less extensive under IFRS.
C) less extensive under ASPE.
D) more extensive under ASPE.

Question 64

Use the following information to answer questions:
Tarantula Corp. reported the following information about the only machine that it owns:
Date of purchase..............................March 31, 2020
Capital cost................................ $\$ 200,000$
Estimated useful life......................10 years
Estimated residual value................ $\$ 20,000$
CCA Class..................................Class $10(30 \%)$ Tarantula uses straight-line depreciation to the nearest month for accounting purposes.

-Assuming Tarantula always takes the maximum CCA, what is the CCA for calendar 2020?

A) $22,500
B) $30,000
C) $45,000
D) $60,000

Question 65

What should a company do if an asset's carrying value exceeds its recoverable amount due to poor estimates? How can companies keep such instances to a minimum?

Question 66

JB Corporation purchased equipment costing $135,000 on January 1, 2018. At that time the useful life of the equipment was estimated to be 12 years and the residual value was estimated to be $7,500. Depreciation up to December 31, 2019 has been recorded using the straight-line method and the company operates on a calendar year basis. On January 1, 2020, the estimated useful life was revised to a total of 10 years and the residual value was revised to $8,000.
Instructions
Prepare the journal entry to record the depreciation expense for 2020. (Show calculations.)

Question 67

For 2020, Walrus Company reported net revenues, average total assets, and net income of $180,000, $24,000, and $100,000 respectively. Walrus Company's asset turnover ratio for 2020 was

A) 1.8.
B) 3.8.
C) 7.5.
D) 8.0.

Question 68

Use the following information to answer questions:
Tarantula Corp. reported the following information about the only machine that it owns:
Date of purchase..............................March 31, 2020
Capital cost................................ $\$ 200,000$
Estimated useful life......................10 years
Estimated residual value................ $\$ 20,000$
CCA Class..................................Class $10(30 \%)$ Tarantula uses straight-line depreciation to the nearest month for accounting purposes.

-Assume that at the end of calendar 2019, the UCC for this machine is $83,300. Tarantula sells the machine on January 2, 2020 for $90,000, and does not replace it. The recapture of CCA or terminal loss would be

A) $60,500 terminal loss.
B) $56,000 recapture.
C) $6,700 terminal loss.
D) $6,700 recapture.

Question 69

A general description of the depreciation methods applicable to major classes of depreciable assets

A) is not a current practice in financial reporting.
B) is not essential to a fair presentation of financial position.
C) is needed in financial reporting when company policy differs from income tax policy.
D) should be included in corporate financial statements or notes thereto.

Question 70

Use the following data for questions.
Wren Corp. reported the following data on its most recent financial statements:

A major objective of capital cost allowance for tax depreciation is to

A) reduce the amount of depreciation expense claimed for income tax purposes.
B) assure that the amount of depreciation for income tax and book purposes will be the same.
C) help taxpayers achieve a faster write-off of their capital assets.
D) require taxpayers to use the actual economic lives of assets in calculating tax depreciation.

Question 71

In 2020, Elephant Corporation's financial statements included the following information: Net income.............................................$19,000
Sales........................................................98,000
Total assets, beginning of year................85,000
Total asseets, end of the year....................112,000
Inventory.....................................................70,000
To one decimal, Elephant's return on assets (ROA) for 2020 was

A) 21.0%.
B) 19.3%.
C) 17.2%.
D) 0.99%.

Question 72

Use the following data to answer the questions:
Wren Corp. reported the following data on its most recent financial statements:
Net revenues:.............................$312,500
Net income................................. $\quad 58,200$
Total assets, Jan 1....................... $\quad 174,280$
Total assets, Dec $31$ ..................... 168,420

-To two decimals, what is Wren Corp.'s rate of return on assets (ROA)?

A) 18.24%
B) 18.62%
C) 33.97%
D) 34.56%

Question 73

Explain why depreciation is not a method of determining an asset's declining value or a matter of valuation.

Question 74

The rate of return on assets (ROA) is calculated by dividing

A) average total assets by net income.
B) net revenue by average total assets.
C) net income by average total assets.
D) net income by net revenue.

Question 75

Componentization and depreciation of PP&E assets
You are the accountant for a manufacturing company. You have just been advised of the acquisition of a new machine. You have received a memo that only gives you the following information:
Grinding Equipment
Model: XZ-1-1000
Cost: $1,250,000
Instructions
To be able to properly account for this asset, list and briefly describe what additional information you require.

Question 76

On January 1, 2020, Seal Corp. purchased a machine costing $250,000. The machine is in an asset class for tax purposes with a 30% CCA rate. It has an estimated $40,000 residual value at the end of its five-year useful life. The CCA deduction for tax purposes for the year 2020 is

A) $25,000.
B) $31,500
C) $37,500.
D) $75,000.

Question 77

Use the following data for questions.
Wren Corp. reported the following data on its most recent financial statements:

Under the capital cost allowance system, which of the following is NOT relevant?

A) the capital cost of the asset
B) the asset class
C) the half-year rule
D) the asset's residual value

Question 78

Definitions
Provide clear, concise answers for the following:
1. Define depreciation.
2. Define depreciation accounting.
3. Does depreciation accounting provide cash? If not, what does provide cash? In relation to cash, what does depreciation accounting do?

Question 79

Use the following data to answer the questions::
Wren Corp. reported the following data on its most recent financial statements:
Net revenues:.............................$312,500
Net income................................. $\quad 58,200$
Total assets, Jan 1....................... $\quad 174,280$
Total assets, Dec $31$ ..................... 168,420

-To two decimals, what is Wren Corp.'s asset turnover ratio?

A) 1.82
B) 1.79
C) 0.35
D) 0.34

Question 80

Use the following data to answer the questions:
Wren Corp. reported the following data on its most recent financial statements:
Net revenues:.............................$312,500
Net income................................. $\quad 58,200$
Total assets, Jan 1....................... $\quad 174,280$
Total assets, Dec $31$ ..................... 168,420

-To two decimals, what is Wren Corp.'s profit margin ratio?

A) 33.97%
B) 18.62%
C) 18.24%
D) 5.37%