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| 1 | |
Depreciation is an exact science that requires no estimation. |
| | A) | True |
| | B) | False |
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| 2 | |
If a car is driven strictly for pleasure it can still be depreciated. |
| | A) | True |
| | B) | False |
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| 3 | |
Depreciation expense results in an indirect tax savings. |
| | A) | True |
| | B) | False |
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| 4 | |
In the straight-line method book value never goes below the residual value. |
| | A) | True |
| | B) | False |
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| 5 | |
In the declining-balance method we can depreciate below the residual value. |
| | A) | True |
| | B) | False |
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| 6 | |
MACRS does not use residual value thus assets are depreciated to zero. |
| | A) | True |
| | B) | False |
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| 7 | |
Straight-line depreciation does not: |
| | A) | Use residual to calculate yearly depreciation |
| | B) | Have a book value |
| | C) | Accelerate depreciation |
| | D) | Let the cost remain the same |
| | E) | None of the above |
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| 8 | |
Which one is not based on passage of time? |
| | A) | Straight-line |
| | B) | Accumulated depreciation |
| | C) | Declining balance |
| | D) | Units-of-production |
| | E) | None of the above |
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| 9 | |
Depreciation expense in the declining-balance method is calculated by the depreciation rate: |
| | A) | Time book value at beginning of year |
| | B) | Plus book value at end of year |
| | C) | Divided by book value at beginning of year |
| | D) | Times accumulated depreciation at year end |
| | E) | None of the above |
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| 10 | |
If a car is depreciated in 4 years the rate of depreciation using twice the straight line rate is: |
| | A) | 25% |
| | B) | 50% |
| | C) | 100% |
| | D) | 75% |
| | E) | None of the above |
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| 11 | |
Cost recovery using MACRS is calculated by: |
| | A) | Rate divided by cost |
| | B) | Rate x cost |
| | C) | Rate + cost |
| | D) | Rate – cost |
| | E) | None of the above |
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| 12 | |
A truck cost $10,500 with a residual value of $500. It has an estimated useful life of 5 years. If the truck was bought on July 9 what would be the book value at end of year 1? |
| | A) | $10,000 |
| | B) | $9,500 |
| | C) | $8,500 |
| | D) | $2,500 |
| | E) | None of the above |
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| 13 | |
A truck cost $6,000 with a residual value of $2,000. The truck is expected to have a useful life of 50,000 miles. By assuming the truck is driven 20,000 miles the first year, the depreciation expense would be: |
| | A) | $2,400 |
| | B) | $240 |
| | C) | $16,000 |
| | D) | $1,600 |
| | E) | None of the above |
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| 14 | |
A truck cost $8,900 with a residual value of $500. It is estimated the useful life of the truck is 4 years. The amount of depreciation expense in year 2 by using the declining-balance method at twice the straight-line rate is: |
| | A) | $4,450 |
| | B) | $2,225 |
| | C) | $2,252 |
| | D) | $612 |
| | E) | None of the above |
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| 15 | |
A truck cost $15,000 with a residual value of $5.000. It is estimated the useful life of the truck is 5 years. The amount of depreciation expense in year 2 by using the declining-balance method at twice the straight-line rate is: |
| | A) | $6,000 |
| | B) | $3,600 |
| | C) | $9,600 |
| | D) | $6,900 |
| | E) | None of the above |
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