1. Is it necessary for a business to use the same method of computing depreciation (a) for all classes of depreciable assets, (b) in the financial statements and in determining income taxes? Explain your answer.
2. What is depreciation and what are some of the methods we use to claculate it? Provide examples
3. In what financial statement are plant assets reported and hiow are they presented? Should we classify them as short term or long term assets?
4. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?
5. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method ?
6. If a fixed asset, such as a computer, were purchased on January 1st for $1,950 with an estimated life of 3 years and a salvage or residual value of $150, what is the journal entry for monthly expense under straight-line depreciation? Explain your answer.