Question :
59.Which of the following statements true with regard to depreciation : 1254521
59.Which of the following statements is true with regard to depreciation expense?
A. A company should use the depreciation method that best matches expense recognition with the use of the asset.
B. A company using straight line will show a smaller book value for assets than if the same company uses double declining balance.
C. Choosing double declining balance over straight line will produce a greater total depreciation expense over the asset’s life.
D. Different companies in the same industry always depreciate similar assets by the same methods.
60.A machine with a book value of $19,000 is sold for $16,000. Which of the following answers would accurately represent the effects of the sale on the financial statements?
A. Option A
B. Option B
C. Option C
D. Option D
61.On September 10, 2013, Flagler Company sold a piece of equipment for $3,000. The equipment had an original cost of $17,000 and accumulated depreciation of $15,500 at the time of the sale. Which of the following correctly shows the effect of the sale on the 2013 financial statements?
A. Option A
B. Option B
C. Option C
D. Option D
62.Marsh Company owned an asset that had cost $22,000. The company sold the asset on January 1, 2013 for $8,000. Accumulated depreciation on the day of sale amounted to $16,000. Based on this information, the sale would result in:
A. An $8,000 increase in total assets.
B. An $8,000 cash inflow in the investing activities section of the cash flow statement.
C. A $2,000 gain in the investing activities section of the statement of cash flows.
D. A $2,000 cash inflow in the financing activities section of the cash flow statement.
63.Goldfarb, Inc. uses MACRS for its income tax returns and straight line depreciation for its financial statements. The company purchased 5 year MACRS property on January 1, 2013 that cost $65,000 and has a $5,000 salvage value and an expected 8 year useful life. Given a depreciation percentage of 20% for the first year for 5 year property, the company would show which of the following on its financial records?
A. a deferred tax liability.
B. the same amount of depreciation expense for financial reporting as for income tax preparation.
C. depreciation expense of $13,000 on the income statement and $7,500 on the tax return.
D. less depreciation expense on the tax return than on the income statement.
64.Which of the following statements is true concerning the modified accelerated cost recovery system (MACRS) for the recognition of depreciation expense?
A. 7-year property will be depreciated more rapidly than 10-year property under the MACRS depreciation method.
B. Under MACRS more depreciation will be recorded in the second accounting period than in the first accounting period because of the half-year convention.
C. MACRS is used for the determination of depreciation expense that is reported on an income tax return.
D. All of these statements are true.
65.For 2013, The Oscar Company records depreciation expense of $12,000 on its income statement and $9,000 of MACRS depreciation on its tax return. Which of the following answers is correct regarding the difference between the two figures?
A. Net income is understated by $3,000 on the 2013 income statement.
B. The difference in depreciation expense is caused by differences between GAAP and the tax code.
C. Deferred taxes of $3,000 are subtracted from taxable income of 2013.
D. The amount of depreciation recorded on the income tax return must be incorrect.
66.On January 1, 2013, the City Taxi Company purchased a new taxi cab for $36,000. The cab has an expected salvage value of $2,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units of production method to determine depreciation expense. The cab was driven 45,000 miles the first year and 48,000 the second year. What would be the depreciation expense reported on the 2014 income statement and the book value of the taxi at the end of 2014?
A. $8,640/$19,260.
B. $8,640/$17,260.
C. $8,160/$20,190.
D. $8,160/$18,190.
67.On January 1, 2013, Leland Company purchased an asset that cost $20,000. The asset had an expected useful life of five years and an estimated salvage value of $4,000. Leland uses the straight-line method for the recognition of depreciation expense. At the beginning of the fourth year of usage, the company revised its estimated salvage value to $2,000. Based on this information, the amount of depreciation expense to be recognized at the end of 2016 is:
A. $4,200.
B. $3,200.
C. $8,400.
D. $5,200.
Furst Company purchased equipment on January 1, 2013 for $41,000. The machines are estimated to have a 5-year life and a salvage value of $2,000. The company uses the straight-line depreciation method.
68.At the beginning of 2016, Furst revised the expected life to eight years. The annual amount of depreciation expense for each of the remaining years would be:
A. $3,520.
B. $2,200.
C. $3,120.
D. $1,950.
