Solve the following:
Cutter Enterprises purchased equipment for $72,000 on January 1, 2006. The equipment is expected to have a five-year life, with a residual value of $6,000 at the end of five years.
Q1. Using the straight-line method, depreciation expense for 2006 would be:
A) $13,200
B) $14,400
C) $72,000
D) None of the above is correct.
Q2. Using the straight-line method, depreciation expense for 2007 and the equipment book value at December 31, 2007 would be:
A) $14,400 and $43,200.
B) $28,800 and $37,200.
C) $13,200 and $39,600.
D) $13,200 and $45,600.
Q3. Using the double-declining balance method, depreciation expense for 2006 and the book value at December 31, 2006 would be:
A) $26,400 and $45,600.
B) $28,800 and $43,200.
C) $28,800 and $37,200.
D) $26,400 and $36,600.
Q4. Using the sum-of-the-years'-digits method, depreciation expense for 2006 and book value at December 31, 2006 would be:
A) $22,000 and $44,000.
B) $22,000 and $50,000.
C) $24,000 and $48,000.
D) $24,000 and $42,000.