A company purchased equipment at the beginning of 2021 for $500,000. The equipment is depreciated on a straight-line basis

A company purchased equipment at the beginning of 2021 for $500,000. The equipment is depreciated on a straight-line basis with an estimated useful life of nine years and a $50,000 residual value. At the beginning of 2024, the company revised the equipment's useful life to a total of seven years (four more years) because of changing customer demand. The company also revised the expected residual value to $30,000. What depreciation expense would the company record for the year 2024 on this equipment?

A) $87,500.

B) $80,000.

C) $50,000.

D) $75,000.

Answer: B

A company purchased equipment at the beginning of 2021 for $650,000. In 2021 and 2022, the company depreciated the asset on a straight-line basis with an estimated useful life of eight years and a $10,000 residual value. At the beginning of 2023, due to changes in technology, the company revised the useful life to a total of six years (four more years) with zero residual value. What depreciation expense would the company record for the year 2023 on this equipment?

A) $108,333.

B) $106,667.

C) $122,500.

D) $81,667.

Answer: C

A company purchased a tractor on January 1, 2021, for $65,000. The tractor's useful life is estimated to be 30,000 miles with an expected residual value of $5,000. If the company used the tractor 5,000 miles in 2021 and 3,000 miles in 2022, what is the balance for accumulated depreciation at the end of 2022 using the activity-based method?

A) $38,000.

B) $6,000.

C) $16,000.

D) $10,000.

Answer: C

During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively,

During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck for $175,000. If the truck has an estimated life of 10 years or 300,000 miles, and an estimated residual value of $25,000, what amount of depreciation expense should Supplies, Inc. record in the second year using the activity-based method?

A) $11,000.

B) $18,500.

C) $7,500.

D) $16,000.

Answer: A

A company purchased a piece of equipment for $50,000 and the equipment has an expected useful life of five years. Its residual value is estimated to be $4,000. Assuming the company uses the double-declining-balance depreciation method, what is the depreciation expense for the equipment for the second full year?

A) $9,200.

B) $9,040.

C) $12,000.

D) $11,040.

Answer: C

On January 1, 2021, a company purchased a machine that cost $500,000 and had a residual value of $50,000. The machine is expected to produce 360,000 units and is estimated to last 10 years. If 25,000 units were produced in 2022 and 35,000 were produced in 2023, what amount of accumulated depreciation is reported at the end of 2022 using the activity-based method (rounded to the nearest whole dollar if necessary)?

A) $43,750.

B) $90,000.

C) $75,000.

D) $31,200.

Answer: C

A company purchased equipment for $240,000 on Mar, 2021. The estimated service life is six years with a $60,000 residual value

A company purchased equipment for $240,000 on Mar, 2021. The estimated service life is six years with a $60,000 residual value. The company records partial-year depreciation based on the number of months in service. Depreciation expense for the year ended December 31, 2021, using straight-line depreciation, is:

A) $33,333.

B) $40,000.

C) $30,000.

D) $25,000.

Answer: D

Best Construction purchased a delivery truck on June 1, 2021. The following information is available:

Cost = $90,000

Estimated service life = 5 years

Estimated residual value = $15,000

Calculate depreciation expense for the year ended December 31, 2021, using straight-line depreciation.

A) $8,750.

B) $15,000.

C) $6,250.

D) $18,000.

Answer: A

Best Construction purchased a delivery truck on June 1, 2021. The following information is available:

Cost = $90,000

Estimated service life = 5 years

Estimated residual value = $15,000

Calculate depreciation expense for the year ended December 31, 2022, using straight-line depreciation.

A) $8,750.

B) $15,000.

C) $6,250.

D) $18,000.

Answer: B

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life,

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, depreciation expense for 2021 would be:

A) $12,000.

B) $11,000.

C) $60,000.

D) None of these.

Answer: B

Which depreciation method generally will result in the greatest amount of depreciation expense in the first year of the asset's life?

A) Straight-line.

B) Double-declining balance.

C) Activity-based.

D) Capitalization.

Answer: B

The depreciable cost used in calculating depreciation expense is:

A) Its service life.

B) The amount allowable under tax depreciation methods.

C) The difference between its replacement value and cost.

D) The asset's cost minus its estimated residual value.

Answer: D

Which one of the following regarding the book value of an asset is correct?

A) It is the fair value of the asset if the asset is sold.

B) It reflects the original cost of the asset less accumulated depreciation.

C) It is the original cost of the asset minus the depreciation expense for that asset during the year.

D) It is the original cost at which the asset was purchased.

Answer: B

The factors used to compute depreciation expense are an asset's:

A) Cost, residual value, and physical life.

B) Cost, residual value, and service life.

C) Fair value, residual value, and economic life.

D) Cost, replacement value, and service life.

Answer: B

Which of the following is considered a "contra" account?

A) Deferred Revenue.

B) Goodwill.

C) Accumulated Depreciation.

D) Cost of Goods Sold.

Answer: C