11) When an asset is fully depreciated, no further depreciation expense is recorded.
12) Companies are required to use Modified Accelerated Cost Recovery System (MACRS) for tax purposes.
13) Which of the following categories of assets should be depreciated?
A) tangible property, plant and equipment, other than land
B) intangible property
D) natural resources
14) Which of the following accounting principles requires businesses to record depreciation?
A) the revenue recognition principle
B) the matching principle
C) the cost principle
D) the going concern principle
15) Which of the following depreciation methods allocates a varying amount of depreciation each year based on an asset's usage?
A) the straight-line method
B) the annuity method
C) the units-of-production method
D) the double-declining-balance method
16) Which of the following depreciation methods writes off a higher amount of depreciation in earlier years than in later years?
A) the units-of-production method
B) the straight-line method
C) the double-declining-balance method
D) the first-in, first-out method
17) The expected cash value of an asset at the end of its useful life is known as ________.
A) book value
B) residual value
C) carrying value
D) market value
18) On January 1, 2015, Anodel Inc. acquired a machine for $1,000,000. The estimated useful life of the asset is 5 years. Residual value at the end of 5 years is estimated to be $50,000. Calculate the depreciation expense per year using the straight-line method.
19) On January 1, 2015, Anodel Inc. acquired a machine for $1,000,000. The estimated useful life of the asset is 5 years. The residual value at the end of 5 years is estimated to be $50,000. What is the book value of the machine at the end of 2016, if the company uses the straight-line method of depreciation?
20) On January 1, 2015, Zade Manufacturing Corporation purchased a machine for $40,000,000. The corporation expects to use the machine for 24,000 hours over the next 6 years. The estimated residual value of the machine at the end of the sixth year is $40,000. The corporation used the machine for 3,600 hours in 2015 and 5,000 hours in 2016. What is the depreciation expense for the year 2015 if the corporation uses the units-of-production method of depreciation?