Reference no: EM132758595
Questions -
Q1. Deland Company purchased an equipment for $35,600 on Jan 1, 2005. The machine has been depreciated using the double declining balance method over a 10-year life and $600 residual value. Deland sold the machine on January 1, 2006, for $30,000. The gain or loss on disposal will be
a. $1,520 gain
b. $1,520 loss
c. $1,300 gain
d. $2,100 gain
Q2. Ariana Self Storage purchased an equipment on October 1, 2005 for $250,000. The company uses the straight line method, the estimated useful life is 5 years (30,000 units), with estimated residual value of $60,000. The depreciation expenses on December 31, 2005 will be:
a. $9,500
b. $240,500
c. $38,000
d. $30,000
Q3. A business purchased an asset that had a total cost of $120,000 and a residual value of $5,000. The asset is expected to service the business for a period of 5 years or produce a total of 500,000 units. The machine was purchased on January 1 st of the current year and has been in service one complete year. If the asset produces 150,000 units in year 1 and 125,000 units in year two. What is the book value of the asset at the end of year two using the units of production method?
a. $56,750
b. $69,000
c. $90,000
d. $59,000
Q4. A depreciation method in which an equal amount of depreciation expenses is assigned each year:
a. Double declining method
b. Unit of production method
c. Straight line method
d. None of the above
Q5. A business purchased an asset that had a total cost of $120,000 and a residual value of $5,000. The asset is expected to service the business for a period of 5 years or produce a total of 500,000 units. The machine was purchased on January 1 st of the current year and has been in service one complete year. What is the depreciation expense in year one if the double declining balance method is used?
a. $48,000
b. $50,000
c. $51,000
d. $45,000
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