Reference no: EM132420096

1.Which of the following methods of amortization is a company most likely to use for financial statement purposes if it purchases a patent?

a)capital cost allowance

B)double-declining-balance

c)units-of-activity

d)straight-line

2.An asset with an original cost of $75,000, a residual value of $7,500, and a useful life of 5 years is given away without any consideration at the end of year five. The entry to record this is

a)Dr. Accumulated depreciation, Dr. Loss on disposal, Cr. Long-Term asset.

b)Dr. Accumulated depreciation, Cr. Gain on disposal, Cr. Long-Term asset

c)Dr. Long-Term asset, Cr. Accumulated depreciation.

d)Dr. Accumulated depreciation, Cr. Long-Term Asset.

3.Bombay Inc. bought new computers on January 1 for $18,000 to improve the quality of their animation. The computers have a useful life of 8 years but Bombay Inc. thinks that continuing technological developments will likely mean they will replace the computers after 4 years, at which time they will be worth $2,000. If they use straight-line depreciation, the depreciation expense for the first year will be

a)$2,000

b)2,250

c)4000

d)4500

4.Which of the following depreciation methods calculates annual depreciation expense based on an asset's cost minus its residual value?

A)Deferred depreciation

b)straight-line

c)capital cost allowance

d)Declining -balance

5.A depreciable asset with a cost of $42,500 has a residual value of $2,500 and a useful life of 8 years. Total estimated units of output are 80,000 and in year 1; 5,200 units were produced. Under the straight-line method and the units-of-activity method the depreciation expense for the first year would be

Straight-line Units-of-activity

a). $5000.00 $2600.00

b). $5000.00 $2762.50

C). $5312.50 $2700.00

d). $5312.50 $2762.50