AC/113 AC113 AC 113 UNIT 8 QUIZ

 1.

Question :

A machine was purchased for $45,000. It has a useful life of 6 years and a residual value of $6,000. Under the straight-line method, what is the annual depreciation expense?

Student Answer:

 $7,500

 $15,000

 $3,750

 $6,500

Question 2.

Question :

A patent was purchased for $670,000 with a legal life of 20 years. Management estimates that the patent has an 8-year economic life. The amortization would include a(n):

Student Answer:

 increase in amortization expense for $33,500

 increase in research and development expense for $670,000

 decrease in Patent for $83,750

 increase in Accumulated Amortization for $670,000

Question 3.

Question :

A company sold a delivery truck for $18,000 cash. The truck cost $47,500 and had accumulated depreciation of $36,000 as of the date of sale. The sale would include a(n):

Student Answer:

 increase in Accumulated Depreciation for $36,000

 decrease in Delivery Truck for $11,500

 increase in a loss for $6,500

 increase in a gain for $6,500

Question 4.

Question :

Pansy Co. purchased a $50,000 truck on January 1, 2011. The truck will be used for 40,000 miles and has a $2,000 residual value. If Pansy drives the truck 12,000 miles during 2011 and uses the units-of-production method of depreciation, what is the depreciation expense for the year ended December 31, 2011?

Student Answer:

 $14,400

 $15,000

 $12,500

 Cannot be determined from the information given

Question 5.

Question :

Which of the following factors are used in computing depreciation expense? Residual Value, Useful Life, Market Value, Initial Cost?

Student Answer:

 Yes, Yes, No, Yes

 Yes, Yes, Yes, Yes

 Yes, No, No, Yes

 No, Yes, Yes, No