Use the Following Data for Questions 10 Through 17

Multiple Choice

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-As generally used in accounting, what is depreciation?

A) It is a process of asset valuation for balance sheet purposes.
B) It applies only to long-lived intangible assets.
C) It is used to indicate a decline in market value of a long-lived asset.
D) It is an accounting process which allocates long-lived asset cost to accounting periods.