Question : 151.Lester Company purchases a piece of equipment Jan. 2, 20×7, : 1244483

151.Lester Company purchases a piece of equipment on Jan. 2, 20×7, for $30,000. The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000. Lester uses a calendar fiscal year. The amount of depreciation to be recorded for 20×7, using the double-declining-balance method, is

 

a.

$7,500.

b.

$5,000.

c.

$5,500.

d.

$4,500.

 

 

 

152.Lester Company purchases a piece of equipment on Jan. 2, 20×7, for $30,000. The equipment has an estimated life of eight years or 50,000 units of production and an estimated residual value of $3,000. Lester uses a calendar fiscal year. The amount of depreciation to be recorded for 20×7, using the production method and assuming that 5,100 units are produced, is

 

a.

$2,550.

b.

$2,754.

c.

$2,652.

d.

$2,856.

 

 

 

153.Which of the following methods ignores residual value initially but eventually considers it in the calculation of depreciation?

 

a.

Straight-line

b.

Production

c.

Double-declining-balance

d.

Tax depreciation

 

 

 

154.Equipment is purchased for $80,000. It has an eight-year useful life and a $38,750 residual value. Under the double-declining-balance method, what is the depreciation expense for year 3?

 

a.

$5,750

b.

$6,750

c.

$6,250

d.

$11,250

 

 

 

155.A graph depicting yearly depreciation expense under an accelerated depreciation method will contain a line that goes

 

a.

up as one goes from left to right.

b.

down as one goes from left to right.

c.

horizontally across.

d.

down and then up as one goes from left to right.

 

 

 

156.Accelerated depreciation assumes all of the following except

 

a.

obsolescence makes an asset less valuable in its later years.

b.

repair expense is less in the early years than in the later years.

c.

asset benefit increases with each year of use.

d.

the asset provides more benefit in the early years.

 

 

 

157.On January 1, a machine with a useful life of five years and a residual value of $3,000 is purchased for $15,000. What is the depreciation expense in year 3 under straight-line depreciation?

 

a.

$2,400

b.

$7,200

c.

$9,000

d.

$3,000

 

 

 

158.On January 1, a machine with a useful life of five years and a residual value of $3,000 is purchased for $15,000. What is the depreciation expense in year 2 using the double-declining-balance method?

 

a.

$3,600

b.

$4,080

c.

$6,000

d.

$4,800

 

 

 

159.Which of the following is irrelevant in computing a machine’s depreciation expense using the production method?

 

a.

Actual units produced in a given period

b.

Estimated units produced over its life

c.

Residual value

d.

Estimated useful life in years

 

 

 

160.A building was purchased for $500,000. It has accumulated depreciation of $80,000 and had a residual value of $100,000. Assuming the use of straight-line depreciation, its estimated useful life must have been

 

a.

ten years.

b.

five years.

c.

fifteen years.

d.

impossible to determine from the facts given.