Question :

(TCO 4)In the first year of an asset’s life, which of the following methods has the largest depreciation?

Student Answer:


Double-Declining balance.

Sum-of-the-years’ digits.

Composite or group.


Question :

(TCO 4)Amortization refers to the cost allocation for:

Student Answer:

A patent.

A building.


A silver mine.


Question :

(TCO 4)The depreciable base for an asset is:

Student Answer:

Its service life.

The excess of its cost over residual value.

The difference between its replacement value and cost.

The amount allowable under MACRS.


Question :

(TCO 4)Cutter Enterprises purchased equipment for $72,000 on January 1, 2011. The equipment is expected to have a five-year life and a residual value of $6,000.
Using the straight-line method, depreciation for 2011 would be:

Student Answer:




None of the above is correct.


Question :

(TCO 4)A change in the estimated useful life and residual value of machinery in the current year is handled as:

Student Answer:

A retrospective change back to the date of acquisition as though the current estimated life and residual value had been used all along.

A prospective change from the current year through the remainder of its useful life, using the new estimates.

A cumulative adjustment to income in the current year for the difference in depreciation under the new vs. old estimates.

None of the above is correct.