Question :
6.2-11) XYZ Company owns an asset with historical cost of : 1253311
6.2-11) XYZ Company owns an asset with historical cost of $75,000, estimated useful life of 10 years, and salvage value of $5,000. As of December 31, 2011, the asset has accumulated depreciation of $49,000 after adjustment. The company still owes $20,000 in liabilities from the purchase of the asset years ago. What is the asset’s book value on December 31, 2011?
A) $70,000
B) $26,000
C) $21,000
D) $6,000
6.2-12) Which statement below is true of the straight-line method of depreciation?
A) It is a method that will provide higher amounts of depreciation expense in the early years of an asset’s life and smaller amounts in the later years.
B) It is a method that results in unequal amounts of depreciation expense each year.
C) It is a method that is based upon the actual amounts of an asset used up each year, such as the number of miles a truck is driven.
D) It is a method that results in equal amounts of depreciation expense each year.
6.2-13) The adjustment to record the use of long-term assets includes a(n) ________.
A) increase in total shareholders’ equity
B) decrease in total shareholders’ equity
C) decrease in total liabilities
D) increase in total liabilities
6.2-14) On January 1, 2011, Petrel Shipping Company bought equipment that cost $55,000 with an estimated useful life of 4 years and an estimated salvage value of $5,000. The company uses the straight-line method of depreciation. At what rate will the equipment depreciate in 2011?
A) 20%
B) 15%
C) 10%
D) 25%
6.2-15) On January 1, 2012, Albatross Shipping Company bought equipment that cost $65,000 and had an estimated useful life of 5 years and an estimated salvage value of $5,000. The company uses the double-declining balance method of depreciation. At what rate will the equipment depreciate in 2012?
A) 20%
B) 15%
C) 10%
D) 40%
6.2-16) Which statement about accelerated depreciation methods is true?
A) They provide higher amounts of depreciation expense in the early years of an asset’s life and smaller amounts in the later years.
B) They provide equal amounts of depreciation expense each year.
C) They provide an unpredictable amount of expense each year because they are based upon the actual amount of an asset used up.
D) They report more total depreciation expense over the life of an asset.
6.2-17) RET Company uses the activity (units-of-production) method to depreciate long-term assets. The company owns a truck that cost $24,000. The truck is estimated to have a salvage value of $2,000 and a useful life of 200,000 miles. How much depreciation expense would be reported on the income statement in a year in which the truck is driven 50,000 miles?
A) $6,500
B) $6,000
C) $5,500
D) $5,000
6.2-18) TER Company uses the activity (units-of-production) method to depreciate long-term assets. The company owns a truck that cost $48,000. The truck is estimated to have a salvage value of $4,000 and a useful life of 200,000 miles. How much depreciation expense would be reported on the income statement in a year in which the truck is driven 50,000 miles?
A) $13,000
B) $12,000
C) $11,000
D) $10,000
6.2-19) Which of the following assets can NOT be depleted?
A) timber
B) coal
C) diamonds
D) copyright
6.2-20) Identify the three acceptable depreciation methods discussed in the textbook.
A) straight-line, capitalization of expense, and activity methods
B) straight-line, operating, and accumulated methods
C) activity, carrying value, and straight-line methods
D) double-declining balance, straight-line, and activity methods
