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ACCT 305 Week 3 Quiz

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ACCT 305 Week 3 Quiz

  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.
  1. Question :           (TCO 4) Amortization refers to the cost allocation for:
  • A patent.
  • A building.
  • Land.
  • A silver mine.
  1. 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.
  1. 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.

 

  1. 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.