Depreciation (1st part)

What is the most common method of calculating depreciation?

• Straight-line method

• Written down Value method

• Annuity method

• Sinking Fund method

Which sentence is correct about tangible property?

• Tangible property is personal property such as a copyright, patent, or franchise

• Tangible property can be seen or touched, and it includes two main types called personal property and real property

• Tangible property is land and generally anything that is erected on, growing on, or attached to land

• Tangible property cannot be seen or touched

What does ATCF stand for?

• Access Transfer Control Function

• Automated Tropical Cyclone Forecasting

• After Tax Cash Flow

• Accreditation of Transferable Competences Framework

How many basic requirements to determine a depreciable property?

• 1

• 2

• 3

• 4

Using the reducing balance method the depreciation expense each year is?

•  A reducing amount

•  A reducing amount

• An increasing amount

Which statement is true about the straight-line method of depreciation?

• It recognizes expense proportionately with the amount of use of the asset

• It is the preferred method for companies expecting to use the asset more in its early years of life.

• It is an accelerated method of depreciation

• It allocates an equal amount of depreciation to each year of the asset's service life

If an asset has a cost of 14,000 and a net book value at the end of year 1 of 11,900, what is the declining balance method depreciation rate applied?

• 15%

• 25%

• 20%

• 30%

How do you calculate the book value of an asset?

• Cost + Accumulated Depreciation

• Cost – Salvage Value

• Cost – Accumulated Depreciation

• Book Value – Salvage Value

Straight-line depreciation is calculated as the depreciable base divided by

• The residual value of the asset.

• The estimated useful life of the asset.

• The cost of the asset.

At the beginning of year 1, Looby Corp. purchases equipment for $100,000. The equipment has a residual value of $20,000 and an expected useful life of 10 years. Assuming straight-line depreciation, what is book value at the end of year 2?

• $84,000

• $92,000

• $64,000

• $16,000

Answer explanation