Question 1

Use the following information for questions 
On January 1, 2022, Flowers Unlimited purchased a new delivery van.The van cost $35,000 with an estimated life of 5 years and $5,000 residual value.Double diminishing-balance depreciation will be used.
-What is the depreciation expense for calendar 2022?
A)$ 3,000
B)$ 6,000
C)$12,000
D)$14,000

Accepted Answer

The double declining balance depreciation for the first year is calculated as: (2 / 5 years) * ($35,000 cost - $0 accumulated depreciation), which equals 40% of $35,000, or $14,000.

Question 2

On January 1, 2022, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000.Using the double diminishing-balance method, the depreciation expense for the year ending December 31, 2023 would be
A)$10,000.
B)$ 9,000.
C)$ 6,000.
D)$ 5,400.

Accepted Answer

The double declining balance method accelerates depreciation. The annual depreciation rate is double the straight-line rate. For a 5-year useful life, the straight-line rate is 20% (100% / 5 years), so the double declining rate is 40%. Year 1 depreciation: $25,000 * 40% = $10,000. End of Year 1 book value: $25,000 - $10,000 = $15,000. Year 2 depreciation: $15,000 * 40% = $6,000.

Question 3

Management should select the depreciation method that
A)is easiest to apply.
B)best measures the asset's fair value each period over its useful life.
C)best reflects the pattern in which the asset's future economic benefits are to be consumed.
D)is required by the government.

Accepted Answer

The correct depreciation method is the one that best reflects the pattern in which the asset's future economic benefits are expected to be consumed by the entity. This approach ensures that the depreciation expense recorded in each period accurately represents the actual usage of the asset, aligning the expense with the revenue it generates.

Question 4

Tran Inc.purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life.Using the double diminishing-balance method, the depreciation expense for the third year would be A)$9,000. B)$6,750. C)$6,188. D)$5,500.

Accepted Answer

The answer of Tran Inc.purchased equipment for $48,000, and estimated...

Question 5

On July 1, 2022, a machine with a useful life of five years and a residual value of $4,000 was purchased for $20,000.Under straight-line depreciation, what is the depreciation expense for calendar 2023?
A)$4,000
B)$3,556
C)$3,200
D)$1,600

Accepted Answer

The answer of On July 1, 2022, a machine with...

Question 6

Use the following information for questions 
On January 1, 2022, Anvil Corp.purchased equipment for $60,000.It was expected to last 5 years, after which it will be sold for $5,000.It is expected to be used for a total of 10,000 machine hours, and was used for 750 hours during the year ended December 31, 2022.
-The depreciation expense for 2022 using the units-of-production method will be
A)$4,125.
B)$11,000.
C)$4,500.
D)$12,250.

Accepted Answer

The units-of-production method calculates depreciation based on the actual usage of the asset. The cost minus the salvage value ($60,000 - $5,000 = $55,000) is divided by the total expected usage (10,000 hours) to find the depreciation per hour, which is $5.50 per hour. For 750 hours of use, the depreciation expense is 750 hours * $5.50/hour = $4,125.

Question 7

Cordo Ltd.uses the units-of-production depreciation method.A new asset is purchased for $30,000 that will produce an estimated 90,000 units over its useful life.Estimated residual value is $3,000.What is the depreciable cost per unit?
A)$3.30
B)$3.00
C)$0.33
D)$0.30

Accepted Answer

The answer of Cordo Ltd.uses the units-of-production depreciation method.A new...

Question 8

Equipment was purchased on January 1 for $39,000 with an estimated residual value of $3,000.The current year's Depreciation Expense is $4,000, calculated on the straight-line basis, and the balance of the Accumulated Depreciation account at the end of the year is $12,000.The remaining useful life of the equipment is
A)3 years.
B)5 years.
C)6 years.
D)9 years.

Accepted Answer

The equipment has a useful life of 6 years, as calculated by dividing the difference between the cost and residual value ($39,000 - $3,000 = $36,000) by the annual depreciation expense ($4,000).

Question 9

Use the following information for questions 
On January 1, 2022, Anvil Corp.purchased equipment for $60,000.It was expected to last 5 years, after which it will be sold for $5,000.It is expected to be used for a total of 10,000 machine hours, and was used for 750 hours during the year ended December 31, 2022.
-The depreciation expense for 2022 using the straight-line method will be
A)$4,125.
B)$11,000.
C)$12,000.
D)$12,250.

Accepted Answer

The straight-line depreciation expense is calculated by subtracting the salvage value from the cost and then dividing by the useful life. Here, ($60,000 - $5,000) / 5 = $11,000 per year.

Question 10

On April 1, 2022, Check Mate Ltd.places a new asset into service.The cost of the asset is $40,000 with an estimated 8-year life and $2,500 residual value.Assuming that Check Mate uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2022?
A)$32,500
B)$30,625
C)$38,125
D)$35,000

Accepted Answer

The answer of On April 1, 2022, Check Mate Ltd.places...

Question 11

On April 1, 2022, a machine was purchased for $33,600.It was estimated that it would have a $3,200 residual value at the end of its 5-year useful life.It was also estimated that the machine would be used for a total of 80,000 hours over the 5 years.If the actual number of machine hours used in 2022 was 12,000 hours and the company uses the units-of-production method of depreciation, the depreciation expense for 2022 would be
A)$5,040.
B)$4,560.
C)$3,780.
D)$3,420.

Accepted Answer

The units-of-production method calculates depreciation based on the actual usage of the asset. The formula for calculating depreciation per unit is: (Cost - Residual Value) / Total Estimated Usage. In this case, ($33,600 - $3,200) / 80,000 hours = $0.38 per hour. For 12,000 hours of use in 2022, the depreciation expense is 12,000 hours * $0.38 = $4,560.

Question 12

Units-of-production is an appropriate depreciation method to use when
A)it is impossible to determine the productivity of the asset.
B)the asset's use will be constant over its useful life.
C)the company is a manufacturing company.
D)the asset's use varies significantly from one period to another.

Accepted Answer

The units-of-production method is most suitable when the wear and tear on an asset varies significantly from one period to another, as it allows depreciation to be based on the actual usage of the asset.

Question 13

The calculation of depreciation using the diminishing-balance method
A)ignores residual value in determining the amount to which a constant rate is applied.
B)multiplies a constant percentage times the previous year's depreciation expense.
C)yields an increasing depreciation expense each period.
D)multiplies a diminishing percentage times a constant carrying amount.

Accepted Answer

The diminishing-balance method of depreciation applies a constant rate to the declining book value of the asset each year, ignoring the residual value in the calculation of the depreciation expense. This results in a higher depreciation expense in the early years of an asset's life, which gradually decreases over time.

Question 14

On October 1, 2022, Ming Wo Ltd.places a new asset into service.The cost of the asset is $16,000 with an estimated 5-year life and $4,000 residual value.If Ming Wo uses straight-line depreciation, the depreciation expense for the year ended January 31, 2023 is
A)$ 600.
B)$ 800.
C)$1,067.
D)$2,400.

Accepted Answer

The answer of On October 1, 2022, Ming Wo Ltd.places...

Question 15

Equipment that cost of $180,000 has an estimated residual value of $15,000 and an estimated useful life of 4 years or 25,000 hours.Using the units-of-production method, the depreciation expense for the first year, during which the machine was used 3,300 hours, would be
A)$45,000.
B)$41,500.
C)$23,760.
D)$21,780.

Accepted Answer

The units-of-production method calculates depreciation based on usage. Depreciation per hour = ($180,000 - $15,000) / 25,000 hours = $6.60/hour. For 3,300 hours, depreciation is 3,300 * $6.60 = $21,780.

Question 16

Beynon Corp.purchased office equipment for $20,000, with an estimated residual value of $4,000 at the end of its 8-year useful life.Assuming the double diminishing-balance method is used, the constant percentage to be applied against the carrying amount each year is
A)10%.
B)12.5%.
C)25%.
D)not determinable.

Accepted Answer

The double diminishing-balance method uses twice the straight-line rate. The straight-line rate is 100% divided by the useful life (8 years), which is 12.5%. Therefore, the double diminishing-balance rate is 25% (2 x 12.5%).

Question 17

Jemima Ltd.purchased factory equipment for $200,000, and estimated that the equipment will have a $20,000 residual value at the end of its estimated 5-year useful life.If Jemima uses the double diminishing-balance method of depreciation, the depreciation expense for the second year after purchase would be
A)$43,200.
B)$48,000.
C)$72,000.
D)$80,000.

Accepted Answer

The answer of Jemima Ltd.purchased factory equipment for $200,000, and...

Question 18

Use the following information for questions 
On January 1, 2022, Anvil Corp.purchased equipment for $60,000.It was expected to last 5 years, after which it will be sold for $5,000.It is expected to be used for a total of 10,000 machine hours, and was used for 750 hours during the year ended December 31, 2022.
-The depreciation expense for 2022 using the double diminishing-balance method will be
A)$11,000.
B)$12,250.
C)$12,000.
D)$24,000.

Accepted Answer

The answer of Use the following information for questions 
On...

Question 19

The depreciation method that applies a constant percentage to the carrying amount at the beginning of the period in calculating depreciation is called
A)straight-line.
B)units-of-production.
C)diminishing-balance.
D)component depreciation.

Accepted Answer

The diminishing-balance method applies a constant percentage to the carrying amount (book value) of the asset at the beginning of each period, resulting in decreasing depreciation expenses over the asset's useful life.

Question 20

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be
A)$14,400.
B)$13,200.
C)$12,000.
D)$11,000.

Accepted Answer

The answer of A machine that cost $72,000 has an...

Quiz 9: Reporting and Analyzing Long-Lived Assets

Use the following information for questions On January 1, 2022, Flowers Unlimited purchased a new delivery van.The van cost $35,000 with an estimated life of 5 years and $5,000 residual value.Double diminishing-balance depreciation will be used. -What is the depreciation expense for calendar 2022?

On January 1, 2022, a machine with a useful life of five years and a residual value of $2,500 was purchased for $25,000.Using the double diminishing-balance method, the depreciation expense for the year ending December 31, 2023 would be

Management should select the depreciation method that

Tran Inc.purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life.Using the double diminishing-balance method, the depreciation expense for the third year would be

On July 1, 2022, a machine with a useful life of five years and a residual value of $4,000 was purchased for $20,000.Under straight-line depreciation, what is the depreciation expense for calendar 2023?

Cordo Ltd.uses the units-of-production depreciation method.A new asset is purchased for $30,000 that will produce an estimated 90,000 units over its useful life.Estimated residual value is $3,000.What is the depreciable cost per unit?

Units-of-production is an appropriate depreciation method to use when

The calculation of depreciation using the diminishing-balance method

On October 1, 2022, Ming Wo Ltd.places a new asset into service.The cost of the asset is $16,000 with an estimated 5-year life and $4,000 residual value.If Ming Wo uses straight-line depreciation, the depreciation expense for the year ended January 31, 2023 is

Equipment that cost of $180,000 has an estimated residual value of $15,000 and an estimated useful life of 4 years or 25,000 hours.Using the units-of-production method, the depreciation expense for the first year, during which the machine was used 3,300 hours, would be

Beynon Corp.purchased office equipment for $20,000, with an estimated residual value of $4,000 at the end of its 8-year useful life.Assuming the double diminishing-balance method is used, the constant percentage to be applied against the carrying amount each year is

The depreciation method that applies a constant percentage to the carrying amount at the beginning of the period in calculating depreciation is called

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be