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.

Question

Quizplus · Accepted Answer

Depreciation is an accounting process that allocates the cost of a long-lived asset over its useful life to determine its book value at the end of each accounting period.

Use the Following Data for Questions 10 Through 17