16 2 learning objective 16 2 1 the cost of equipment is expensed a at the time it is 4303439

 

16.2   Learning Objective 16-2

1) The cost of equipment is expensed:

A) at the time it is paid.

B) over the periods that benefit the company.

C) in the period it is purchased.

D) in the period it is sold.

2) In the last year of useful life, the salvage value was ignored using double declining-balance depreciation. This error would cause:

A) the period's end assets to be overstated.

B) the period's depreciation expense to be understated.

C) the period end assets to be understated.

D) None of these is correct.

3) When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:

A) the period end assets to be overstated.

B) the period's depreciation expense to be overstated.

C) the period end assets to be understated.

D) None of these is correct.

4) Salvage value was ignored when originally calculating the units-of-production depreciation. This error would cause:

A) the period's net income to be overstated.

B) the period's net income to be understated.

C) the period end assets to be overstated.

D) None of these is correct.

5) The depreciation method which charges more expense in earlier years than in later years is the:

A) straight-line method.

B) double declining-balance method.

C) units-of-production method.

D) All of the above are correct.

6) The depreciation method in which an even amount of depreciation expense is taken each year is called:

A) straight-line method.

B) double declining-balance method.

C) units-of-production method.

D) All of the above are correct.

7) The depreciation method that does not base the expense on the passage of time but on the level of use is:

A) units-of-production.

B) straight-line.

C) modified accelerated cost recovery.

D) double declining-balance.

8) Which depreciation method deducts residual value when computing depreciation expense?

A) Units-of-production

B) Straight-line

C) Double declining-balance

D) Both A and B are correct.

9) Which depreciation method uses twice the straight-line rate?

A) Units-of-production

B) Modified accelerated cost recovery

C) Straight-line

D) Double declining-balance

10) Assuming a useful life of five years, which of the following GAAP methods would most likely result in the most depreciation in the first year?

A) Straight-line

B) MACRS

C) Double declining-balance

D) None of these answers is correct.