ACC 206 WEEK 2 CHAPTER 10 QUIZ

Multiple Choice Question 100
On October 1, 2014, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2014, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?

$114,000

$78,000

$90,000

$108,000

Multiple Choice Question 130
Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for year 3 would be

$8,400.

$11,200.

$18,667.

$14,000.
Carey Company buys land for $50,000 on 12/31/13. As of 3/31/14, the land has appreciated in value to $50,700. On 12/31/14, the land has an appraised value of $51,800. By what amount should the Land account be increased in 2014

$700

$1,100

$1,800

$0
Multiple Choice Question 117
Drago Company purchased equipment on January 1, 2014, at a total invoice cost of $1,200,000. The equipment has an estimated salvage value of $30,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2015, if the straight-line method of depreciation is used?

$468,000

$240,000

$480,000

$234,000

Multiple Choice Question 127
Able Towing Company purchased a tow truck for $180,000 on January 1, 2014. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $36,000. On December 31, 2016, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2016) and the salvage value to $5,000. What was the depreciation expense for 2016?

$45,000.

$18,000.

$14,400.

$36,550.
Multiple Choice Question 81
Depreciation is a process of

asset devaluation.

cost accumulation.

cost allocation.

asset valuation.

Multiple Choice Question 104
The calculation of depreciation using the declining balance method,

multiplies a constant percentage times the previous year’s depreciation expense.

yields an increasing depreciation expense each period.

ignores salvage value in determining the amount to which a constant rate is applied.

multiplies a declining percentage times a constant book value
Multiple Choice Question 143
The book value of a plant asset is the difference between the

proceeds received from the sale of the asset and its original cost.

replacement cost of the asset and its historical cost.

cost of the asset and the amount of depreciation expense for the year.

cost of the asset and the accumulated depreciation to date.
Multiple Choice Question 162
On a balance sheet, natural resources may be described more specifically as all of the following except

oil reserves.

timberlands.

land improvements.

mineral deposits.
Multiple Choice Question 140
Additions and improvements

normally involve immaterial expenditures.

occur frequently during the ownership of a plant asset.

increase the book value of plant assets when incurred.

typically only benefit the current accounting period.