Questions:
1. Question : In the first year of an asset's life, which of the following methods has the largest depreciation?
Straight-line.
Double-Declining balance.
Sum-of-the-years' digits.
Composite or group.
2. Question : Amortization refers to the cost allocation for:
A patent.
A building.
Land.
A silver mine.
3. Question : The depreciable base for an asset is:
Its service life.
The excess of its cost over residual value.
The difference between its replacement value and cost.
The amount allowable under MACRS.
4. Question :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:
$13,200.
$14,400.
$72,000.
None of the above is correct.
5. Question : A change in the estimated useful life and residual value of machinery in the current year is handled as:
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.