Quiz Questions for Chapter 9
Quiz Questions for Chapter 9
1.
A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset’s carrying value (book value) after 2 1/2 years?
a. $8,750.
b. $12,250.
c. $14,583.
d. $16,250.
2.
On January 1, 2003, Superior Landscaping Company paid $17,000 to buy a stump grinder. If Superior uses the grinder to remove 2,500 stumps per year, it would have an estimated useful life of 10 years and a salvage value of $4,500. The amount of depreciation expense for the year 2003, using units-of-production depreciation and assuming that 3,500 stumps were removed, is
a. $2,380.
b. $1,750.
c. $1,700.
d. $1,250.
3.
The sale for $2,000 of equipment that cost $8,000 and has accumulated depreciation of $6,700 would result in a
a. gain of $2,000.
b. gain of $700.
c. loss of $700.
d. loss of $1,300.
4.
Underestimating the number of tons of a mineral that can be mined over a mineral deposit’s life will result in
a. overstated net income each year.
b. overstated total assets each year.
c. overstated depletion expense each year.
d. no effect on total assets each year.
5.
A copyright is obtained for what becomes a very successful book. The publisher expects the book to generate sales for 10 years. The copyright should be amortized over
a. 2 to 4 years.
b. 10 years.
c. 40 years.
d. the author’s life plus 50 years.
The following information pertains to the next two questions. Z Company purchased an asset for $24,000 on
January 1, 2004. The asset was expected to have a four-year life and a $4,000 salvage value.
6.
The amount of depreciation expense for 2006 using double-declining-balance would be
a. $2,000.
b. $3,000.
c. $6,000.
d. $12,000.
7.
Assume that Z Company uses straight-line depreciation. If on January 1, 2007, Z Company sells the asset for $10,000, the statement of cash flows would report a
a. $1,000 cash inflow from gain on the
1.
A truck was purchased for $25,000. It has a six-year life and a $4,000 salvage value. Using straight-line depreciation, what is the asset’s carrying value (book value) after 2 1/2 years?
a. $8,750.
b. $12,250.
c. $14,583.
d. $16,250.
2.
On January 1, 2003, Superior Landscaping Company paid $17,000 to buy a stump grinder. If Superior uses the grinder to remove 2,500 stumps per year, it would have an estimated useful life of 10 years and a salvage value of $4,500. The amount of depreciation expense for the year 2003, using units-of-production depreciation and assuming that 3,500 stumps were removed, is
a. $2,380.
b. $1,750.
c. $1,700.
d. $1,250.
3.
The sale for $2,000 of equipment that cost $8,000 and has accumulated depreciation of $6,700 would result in a
a. gain of $2,000.
b. gain of $700.
c. loss of $700.
d. loss of $1,300.
4.
Underestimating the number of tons of a mineral that can be mined over a mineral deposit’s life will result in
a. overstated net income each year.
b. overstated total assets each year.
c. overstated depletion expense each year.
d. no effect on total assets each year.
5.
A copyright is obtained for what becomes a very successful book. The publisher expects the book to generate sales for 10 years. The copyright should be amortized over
a. 2 to 4 years.
b. 10 years.
c. 40 years.
d. the author’s life plus 50 years.
The following information pertains to the next two questions. Z Company purchased an asset for $24,000 on
January 1, 2004. The asset was expected to have a four-year life and a $4,000 salvage value.
6.
The amount of depreciation expense for 2006 using double-declining-balance would be
a. $2,000.
b. $3,000.
c. $6,000.
d. $12,000.
7.
Assume that Z Company uses straight-line depreciation. If on January 1, 2007, Z Company sells the asset for $10,000, the statement of cash flows would report a
a. $1,000 cash inflow from gain on the