ACCT 305 WEEK 3 QUIZ

ACCT 305 WEEK 3 QUIZ

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1. Question :     (TCO 4) In the first year of an asset’s life, which of the following methods has the largest depreciation?

• Straight-line.
• Double-Declining balance.
• Sum-of-the-years’ digits.
• Composite or group.

2. Question :           (TCO 4) Amortization refers to the cost allocation for:

• A patent.
• A building.
• Land.
• A silver mine.

3. Question :           (TCO 4) The depreciable base for an asset is:

• Its service life.
• The excess of its cost over residual value.
• The difference between its replacement value and cost.
• The amount allowable under MACRS.

4. Question : (TCO 4) Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.

Using the straight-line method, depreciation for 2011 would be:

• $13,200.
• $14,400.
• $72,000.
• None of the above is correct.

5. Question : (TCO 4) A change in the estimated useful life and residual value of machinery in the current year is handled as:

• A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.
• A prospective change from the current year through the remainder of its useful life, using the new estimates.
• A cumulative adjustment to income in the current year for the difference in depreciation under the new vs. old estimates.
• None of the above is correct.