Depreciation, impairments and depletion

Multiple choice questions quiz

Your answer is incorrect. The correct answer is “cost allocation” (option 2).

Your answer is incorrect. The correct answer is “depreciable cost” (option 3).

Your answer is incorrect. The correct answer is “$450” (option 4).

Your answer is incorrect. The correct answer is “purchase cost + costs attributable to put the asset for use” (option 2).

Your answer is incorrect. The correct answer is “10%” (option 4).

Straight-line depreciation rate in percentage = (1/Useful economic life) × 100

Your answer is incorrect. The correct answer is “contra asset account” (option 1).

Your answer is incorrect. The correct answer is “Depreciation expense – equipment Dr; Accumulated depreciation – equipment Cr” (option 3).

Your answer is incorrect. The correct answer is “asset’s activity during the period” (option 4).

Your answer is incorrect. The correct answer is “$14,000” (option 2).

Computation:

= [{(Cost – Salvage value)/Estimated life time hours} × Actual hours]
= [{($150,000 – $10,000)/20,000 hours} × 2,000 hours]
= $14,000

Your answer is incorrect. The correct answer is “cost – accumulated depreciation” (option 1).

Your answer is incorrect. The correct answer is “$9,600” (option 3).

Your answer is incorrect. The correct answer is “historical cost of the asset” (option 4).

Your answer is incorrect. The correct answer is “$250,000” (option 2).

Computation:

Depreciable cost: $800,000 – $50,000 = $750,000
Depreciation for the first year: ($750,000/15*) × 5 = $250,000

*Sum of years digits: 5 + 4 + 3 + 2 + 1 = 15

Your answer is incorrect. The correct answer is “28” (option 4).

Computation:

Sum of years’ digits: 7 + 6 + 5 + 4 + 3 + 2 + 1 = 28

or

Sum of years’ digits: n(n + 1)/2 = 7(7 + 1)/2 = 56/2 = 28

Your answer is incorrect. The correct answer is “straight line method” (option 3).

Your answer is incorrect. The correct answer is “More depreciation in early years and less depreciation in later years of asset’s life” (option 2).