1. When an accelerated depreciation method is used to calculate depreciation expense:
A. The net book value of the asset halfway through its useful life will be less than if straight-line depreciation is used.
B. Depreciation expense will be less in the early years of the asset's life than if straight-line depreciation is used.
C. The accumulated depreciation account balance will increase by a larger amount in the last half of an asset's life than if straight-line depreciation is used.
2. When a machine having a net book value of $5,000 is sold for $4,000:
A. Current assets increase, equipment (net) increases, and net income increases.
B. Current assets increase, equipment (net) decreases, and net income decreases.
C. Current assets increase, equipment (net) increases, and net income decreases.
3. If an organization has an obligation to pay $5,000 to a supplier two years from now, the present value of the obligation:
A. Is less than $5,000.
B. Is $5,000.
C. Could be calculated using an annuity factor from the present value tables.
4. The intangible asset "goodwill:"
A. Represents the management team's assessment of its value to the company.
B. May arise when one company purchases another company.
C. Arises because the market value of a company's assets is greater than cost.
5. The net book value of a depreciable asset is:
A. The fair market value of the asset.
B. The amount for which the asset should be insured.
C. The difference between the asset's cost and accumulated depreciation.
6. Accounting for natural resources:
A. Involves using the accumulated depreciation account.
B. Involves estimating the quantity of the natural resource to be recovered.
C. Involves an exception to the matching concept.
7. Moped, Inc. purchased machinery at a cost of $22,000 on January 1, 2011. The expected useful life is 5 years and the asset is expected to have salvage value of $2,000. Moped depreciates its assets via the double-declining balance method.
What is the firm's depreciation expense for the year ended December 31, 2011?
A. $ 4,400
B. $ 6,000
C. $ 8,800