Q1. A building cost $25,000 and has a $5,000 residual value and an expected useful life of ten years. What is the depreciation expense in Year 1 using the Double-Declining-Balance Method at the straight-line rate?
$2,000
None of the other alternatives are correct
$5,000
$2,500
$4,000
Q2. Helen's Corporation purchased factory equipment on July 1, 2015 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. The market value of the equipment is $55,000. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015 is:
$4,800
None of the other alternatives are correct
$4,900
$6,000
$4,200
Q3. On August 1, 2015, Toy Inc. purchased a new piece of equipment that cost $25000. The estimated useful life is five years and the estimated residual value is $ 2,500. During the five years of useful life the equipment is expected to produce 10,000 units.
If Toy Inc. uses the straight line method for depreciation, what is the depreciation expense for the year ended, December 31st, 2015:
$1,500
None of the other alternatives are correct
$4,500
$2,083
$1,875
Q4. On January 1, 2011, Dexter Corporation purchased a piece of equipment, which is being depreciated on a straight-line basis over a useful life of 5 years, with a residual value of $ 10,000. The equipment's accumulated depreciation account has a credit balance of $70,000 and an adjusted credit balance of $105,000 on January 1, 2013 and December 31, 2013, respectively. The original cost of the equipment is:
$105,000
$115,000
$185,000
$175,000
None of the other alternatives are correct
Q5. On May 1, 2015, Casico Toy Inc. purchased a new piece of equipment that cost $52,000. The estimated useful life is five years and the estimated residual value is $ 4,000. During the five years of useful life the equipment is expected to produce 20,000 units.
If Toy Inc. uses the straight line method for depreciation, what is the depreciation expense for the year ended, December 31st, 2015:
$ 6,933
$ 9,600
None of the other alternatives are correct
$ 5,600
$ 6,400
Q6. Carrier Company buys a truck costing $15,000. It is expected to last for 8 years but to be traded-in after 4 years for a newer model (the trade-in allowance is estimated at $3,000). The truck is expected to be driven
20,000Km Yr 1
25,000 Km Yr 2
35,000 Km Yr 3
What is the depreciation expense in year 3 under the units of activity depreciation method.
$5,100
$3,500
$5,250
None of the above
$3,900
Q7. Shark Ltd. buys a building on April 1, 2010 for $600,000. The building will last for 40 years, but Shark expects to use the building for 25 years. At the end of 40 years the building will have no disposal value, but is expected to have a $100,000 disposal value at the end of 25 years. Shark uses the straight-line method of depreciation.
The depreciation expense at for the year-ended December 31, 2010 is:
$11,200
$10,800
$9,375
None of the above
$7,500