Deck 14: Depreciation

Question 1

Provide an appropriate response.
Explain how the annual depreciation amount is found using the units-of-production method.

Answer 1

Answers will vary.

Question 2

Provide an appropriate response.
Describe in your own words the conditions under which the units-of-production method of depreciation is most applicable.

Answer 2

Answers will vary.

Question 3

Find the annual amount of depreciation using the straight-line method. Round to the nearest dollar.
Cost: $4,100
Estimated life: 6 years
Estimated scrap value: $600

A)$683
B)$583
C)$600
D)$100

Answer 3

$583

Question 4

Provide an appropriate response.
Describe three features that are unique to the Modified ACRS method of depreciation.

Question 5

Find the annual amount of depreciation using the units-of-production method. Round to the nearest dollar.
Depreciation per unit: $0.06
Units of production: 237,000

A)$14,220
B)$39,500
C)$1,422
D)$395,000

Question 6

Use the MACRS depreciation rates table to find the recovery percent (rate), given the recovery year and recovery period.
Recovery year: 4
Recovery period: 3-year

A)11.52%
B)19.2%
C)14.81%
D)7.41%

Question 7

Provide an appropriate response.
Explain in your own words why the book values of an asset may never be less than the salvage value.

Question 8

Provide an appropriate response.
Explain how to determine the depreciation fraction in any year of an asset's life when using the sum-of-the-years'-digits method of depreciation.

Question 9

Provide an appropriate response.
Explain in your own words why the accumulated depreciation plus the book value equals the total cost in each year of an asset's life.

Question 10

Provide an appropriate response.
Compare the three depreciation methods: straight-line, double-declining-balance, and sum-of-the-years'-digits.

Question 11

Find the annual straight-line rate of depreciation for the estimated life.
6 years

A)6%
B)8.3%
C)1.7%
D)16.7%

Question 12

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $400,000
Recovery Period: 10-year
After: First Year

A)$360,000
B)$328,000
C)$302,040
D)$342,840

Question 13

Solve the problem.
A printing press cost $47,100 and has an estimated life of 11 years and a scrap value of $5,652. Find
The total depreciation at the end of 2 years using the straight-line method. Round to nearest dollar.

A)$43,332
B)$38,536
C)$39,564
D)$7,536

Question 14

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $296,500
Period: 7-year

A)$42,370
B)$59,300
C)$72,613
D)$29,650

Question 15

Find the annual double-declining-balance (200% method) rate of depreciation.
30 years

A)300%
B)
C)
D)

Question 16

Find the book value to the nearest dollar.
Cost $8,080, life 5 years, scrap value $808 at the end of 2 years using double-declining balance
Method

A)$3,426
B)$5,171
C)$5,462
D)$2,909

Question 17

Use the MACRS depreciation rates table to find the recovery percent (rate), given the recovery year and recovery period.
Recovery year: 8
Recovery period: 27.5-year

A)3.636%
B)6.177%
C)3.637%
D)1.818%

Question 18

Provide an appropriate response.
Explain why a business asset may be depreciated using two or more different methods.

Question 19

Find the annual amount of depreciation using the units-of-production method. Round to the nearest dollar.
Depreciation per unit: $0.09
Units of production: 214,000

A)$19,260
B)$237,778
C)$23,778
D)$1,926

Question 20

Solve the problem. Round to the nearest dollar.
SLM Instruments bought a metal punch machine at a cost of $8,700. The expected life is 5,000 hours
Of production with a salvage value of $870. Find the book value at the end of the third year. Use the
Units-of-production method of depreciation given the following production schedule.
Year 1 -1,150 hours
Year 2- 1,580 hours
Year 3- 1,280 hours

A)$1,534
B)$1,723
C)$2,404
D)$6,296

Question 21

Find the first year's depreciation, using the double-declining-balance method. Round to the nearest dollar.
Cost: $1,550
Est. life: 20 years
Est. scrap: $155

A)$155
B)$78
C)$140
D)$70

Question 22

Find the depreciation per unit. Round to the nearest cent.
Cost: $6,600
Salvage: $500
Est. Life: 21,000 units

A)$3.10
B)$2.90
C)$0.29
D)$0.31

Question 23

Find the book value after the given number of years, using the straight-line method. Round your answer to the nearest dollar.

A)$3,800
B)$700
C)$3,750
D)$3,100

Question 24

Find the depreciation per unit. Round to the nearest cent.
Cost: $19,000
Salvage: $1,900
Est. Life: 220,000 miles

A)$0.90
B)$0.09
C)$0.80
D)$0.08

Question 25

Use the double-declining-balance method of depreciation. Round to the nearest dollar.
Metal Fabricators buys a milling machine for $3,500 and estimates its useful life at 4 years and its
Salvage value at $350. What is the amount of depreciation each year?

A)$1,750, $875, $438, $88
B)$1,575, $788, $788, $438
C)$788, $788, $788, $788
D)$875, $875, $875, $875

Question 26

Use the MACRS depreciation rates table to solve the problem. Round to the nearest dollar.
Marcus McGuire purchased a rental duplex (27.5-year property)for $101,000. Find its book value
At the end of 5 years.

A)$71,169
B)$79,118
C)$82,791
D)$86,463

Question 27

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $120,500
Recovery Period: 27.5-year
After: Third Year

A)$99,237
B)$108,450
C)$107,538
D)$103,156

Question 28

Find the depreciation per unit. Round to the nearest cent.
Cost: $655,000
Salvage: $65,500
Est. Life: 62,000 hours

A)$9.51
B)$105.60
C)$10.56
D)$95.10

Question 29

Find the book value after the given number of years, using the straight-line method. Round your answer to the nearest dollar.
Find the book value at the end of 4 years.
Cost: $39,000
Estimated life: 9 years
Estimated scrap value: $5,100

A)$15,067
B)$23,933
C)$31,467
D)$21,667

Question 30

Find the book value after the given number of years, using the straight-line method. Round your answer to the nearest dollar.
Find the book value at the end of 5 years.
Cost: $77,500
Estimated life: 50 years
Estimated scrap value: $4,650

A)$76,043
B)$7,285
C)$70,215
D)$69,750

Question 31

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $190,000
Recovery Period: 5-year
After: Third year

A)$153,520
B)$54,720
C)$36,480
D)$106,913

Question 32

Use the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.
Find the book value at the end of the third year for a service van which cost $16,000, has a life of 8
Years, and an estimated scrap value of $1,600.

A)$7,600
B)$10,000
C)$8,400
D)$6,000

Question 33

Solve the problem.
A drill press cost $5,000 and has an estimated life of 8 years and a scrap value of $300. Find the
Book value at the end of 6 years using the straight-line method. Round to nearest dollar.

A)$4,413
B)$3,525
C)$1,250
D)$1,475

Question 34

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $402,500
Period: 27.5-year

A)$15,094
B)$14,027
C)$1,402,713
D)$14,611

Question 35

Use the double-declining-balance method of depreciation. Round to the nearest dollar.
Royal Oaks Golf Course buys a tractor for $8,900 and estimates the life at 8 years with a scrap value
Of $890. What is its book value at the end of the fourth year?

A)$4,005
B)$2,816
C)$2,534
D)$890

Question 36

Find the book value to the nearest dollar.
Cost $7,090, life 6 years, scrap value $780 at the end of 3 years using double-declining balance
Method

A)$2,101
B)$4,103
C)$2,650
D)$4,432

Question 37

Find the annual amount of depreciation using the straight-line method. Round to the nearest dollar.
Cost: $460
Estimated life: 8 years
Estimated scrap value: $92

A)$12
B)$92
C)$58
D)$46

Question 38

Find the first year's depreciation using the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.

A)$14,500
B)$24,857
C)$21,571
D)$65,143

Question 39

Find the book value after the given number of years, using the straight-line method. Round your answer to the nearest dollar.

A)$2,974
B)$1,632
C)$1,668
D)$1,467

Question 40

Find the book value to the nearest dollar.
Cost $2,890, life 7 years, scrap value $231 at the end of 1 year, sum-of-the-years'-digits method

A)$2,225
B)$2,510
C)$2,477
D)$2,064

Question 41

Find the book value to the nearest dollar.
Cost $8,100, life 4 years, scrap value $405 at the end of 3 years, sum-of-the-years'-digits method

A)$1,175
B)$4,050
C)$2,025
D)$2,329

Question 42

Find the annual amount of depreciation using the units-of-production method. Round to the nearest dollar.
Depreciation per unit: $0.36
Units of production: 23,000

A)$639
B)$8,280
C)$828
D)$6,389

Question 43

Solve the problem. Round to the nearest dollar.
A construction company purchased a piece of equipment for $1,610. The expected life is 9,000
Hours, after which it will have a salvage value of $290. Find the amount of depreciation for the first
Year if the piece of equipment was used for 1,700 hours. Use the units-of-production method of
Depreciation.

A)$255
B)$149
C)$304
D)$177

Question 44

Find the first year's depreciation, using the double-declining-balance method. Round to the nearest dollar.
Cost: $3,400
Est. life: 6 years
Est. scrap: $800

A)$433
B)$867
C)$567
D)$1,133

Question 45

Use the double-declining-balance method of depreciation. Round to the nearest dollar.
New Town Deli buys refrigerated counters for $34,000 and estimates the life at 5 years with a scrap
Value of $3,400. What is the amount of depreciation for the third year?

A)$3,400
B)$6,120
C)$4,896
D)$4,406

Question 46

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $8,760
Period: 5-year

A)$1,252
B)$1,752
C)$2,920
D)$3,894

Question 47

Find the annual straight-line rate of depreciation for the estimated life.
30 years

A)1.7%
B)30%
C)0.3%
D)3.3%

Question 48

Use the MACRS depreciation rates table to find the recovery percent (rate), given the recovery year and recovery period.
Recovery year: 9
Recovery period: 20-year

A)3.637%
B)4.461%
C)4.522%
D)4.462%

Question 49

Solve the problem.
The Windmill Harbour Marina purchased a boat hauling rig for $543,000. Its estimated life is 16
Years, at which time it will have a scrap value of $3,200. Use the straight-line method of
Depreciation to find the annual amount of depreciation. Find the book value at the end of 9 years.

A)$33,938, $846,642
B)$33,938, $305,442
C)$33,738, $239,358
D)$33,738, $303,642

Question 50

Use the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.
Find the book value at the end of the second year for an air filtration system which cost $6,300, has
A life of 5 years, and an estimated scrap value of $630.

A)$4,032
B)$2,520
C)$2,898
D)$3,402

Question 51

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $35,000
Recovery Period: 5-year
After: First Year

A)$23,335
B)$23,800
C)$29,999
D)$28,000

Question 52

Solve the problem.
Tech Support Associates purchased a new computer network server and replaced all its terminals
For $29,600. Its estimated life is 4 years, at which time it will have a scrap value of $2,100. Use the
Straight-line method of depreciation to find the annual amount of depreciation. Find the book
Value at the end of 3 years.

A)$7,400, $7,400
B)$6,875, $20,625
C)$6,875, $8,975
D)$7,400, $22,200

Question 53

Use the MACRS depreciation rates table to find the recovery percent (rate), given the recovery year and recovery period.
Recovery year: 5
Recovery period: 10-year

A)11.52%
B)9.22%
C)5.713%
D)8.93%

Question 54

Find the annual double-declining-balance (200% method) rate of depreciation.
9 years

A)
B)
C)
D)90%

Question 55

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $167,000
Recovery Period: 7-year
After: Fourth year

A)$76,954
B)$48,096
C)$20,858
D)$52,171

Question 56

Solve the problem.
A drilling rig cost $20,600 and has an estimated life of 8 years and a scrap value of $1,030. Find the
Book value at the end of 5 years using the straight-line method. Round to nearest dollar.

A)$7,725
B)$8,369
C)$18,154
D)$12,231

Question 57

Use the MACRS depreciation rates table to find the recovery percent (rate), given the recovery year and recovery period.
Recovery year: 5
Recovery period: 5-year

A)8.93%
B)12.49%
C)7.41%
D)11.52%

Question 58

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $9,580
Recovery Period: 3-year
After: First Year

A)$8,161
B)$6,387
C)$7,664
D)$7,741

Question 59

Find the first year's depreciation, using the double-declining-balance method. Round to the nearest dollar.
Cost: $54,000
Est. life: 20 years
Est. scrap: $5,000

A)$2,700
B)$2,450
C)$4,900
D)$5,400

Question 60

Find the book value after the given number of years, using the straight-line method. Round your answer to the nearest dollar.
Find the book value at the end of 10 years.
Cost: $67,500
Estimated life: 12 years
Estimated scrap value: $4,050

A)$62,213
B)$11,250
C)$52,875
D)$14,625

Question 61

Use the double-declining-balance method of depreciation. Round to the nearest dollar.
Beta Graphics buys some CAD-CAM computer equipment at a cost of $8,350 and estimates the life
At 10 years with a scrap value of $835. What is its book value at the end of the fourth year?

A)$5,344
B)$3,420
C)$835
D)$3,078

Question 62

Use the MACRS depreciation rates table to solve the problem. Round to the nearest dollar.
NewAge Consulting purchased a desktop publishing system (5-year property)at a cost of $9,600.
Find the accumulated depreciation at the end of 3 years.

A)$5,402
B)$7,941
C)$8,889
D)$6,835

Question 63

Find the sum-of-the-years'-digits depreciation fraction for the first year.
8 years

A)
B)
C)
D)

Question 64

Find the first year's depreciation using the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.

A)$8,750
B)$54,444
C)$61,250
D)$15,556

Question 65

Solve the problem. Round to the nearest dollar.
Rainbow Ice Cream bought a frozen custard maker that cost $9,400. The expected life is 5,000 hours
Of production with a salvage value of $940. Find the book value at the end of the third year. Use the
Units-of-production method of depreciation given the following production schedule.

A)$1,244
B)$1,372
C)$2,184
D)$7,216

Question 66

Find the book value to the nearest dollar.
Cost $7,030, life 2 years, scrap value $633 at the end of 1 year using double-declining balance
Method

A)$633
B)$0
C)$3,515
D)$3,832

Question 67

Find the book value to the nearest dollar.
Cost $91,900, life 11 years, scrap value $8,271 at the end of 1 year, sum-of-the-years'-digits
Method

A)$84,297
B)$75,191
C)$83,545
D)$77,962

Question 68

Find the sum-of-the-years'-digits depreciation fraction for the first year.
30 years

A)
B)
C)
D)

Question 69

Use the MACRS depreciation rates table to solve the problem. Round to the nearest dollar.
Respiratory Care, Inc. purchased new packaging equipment (5-year property)at a cost of $8,150.
Find the book value at the end of 4 years.

A)$2,546
B)$2,556
C)$1,408
D)$2,347

Question 70

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $425,000
Period: 10-year

A)$104,083
B)$60,733
C)$42,500
D)$76,500

Question 71

Use the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.
Scot Cleaners bought a new trouser press for $7,500 and estimates its life at 4 years at which time
The salvage value is expected to be $750. Find the amount of depreciation each year.

A)$3,750, $1,875, $938, $188
B)$2,700, $2,025, $1,350, $675
C)$3,000, $2,250, $1,500, $750
D)$1,688, $1,688, $1,688, $1,688

Question 72

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $34,800
Period: 5-year

A)$11,599
B)$6,960
C)$11,136
D)$4,973

Question 73

Find the depreciation per unit. Round to the nearest cent.
Cost: $7,000
Salvage: $350
Est. Life: 200,000 copies

A)$0.30
B)$0.03
C)$0.40
D)$0.04

Question 74

Use the sum-of-the-years'-digits method of depreciation. Round to the nearest dollar.
Find the depreciation in the third year for a power generator which costs $25,000, has a life of 12
Years, and an estimated scrap value of $2,500.

A)$961
B)$3,205
C)$962
D)$2,885

Question 75

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $9,500
Recovery Period: 5-year
After: First Year

A)$6,334
B)$5,277
C)$8,142
D)$7,600

Question 76

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $309,500
Recovery Period: 7-year
After: First Year

A)$278,550
B)$247,600
C)$265,272
D)$233,703

Question 77

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $9,040
Period: 3-year

A)$1,339
B)$3,013
C)$1,808
D)$1,736

Question 78

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
Cost: $90,500
Period: 20-year

A)$6,533
B)$1,645
C)$3,394
D)$9,050

Question 79

Use the MACRS depreciation rates table to solve the problem. Round to the nearest dollar.
Angelica Healthcare purchased new lab equipment (7-year property)for $138,000. Find the
Accumulated depreciation at the end of 5 years.

A)$114,154
B)$107,212
C)$119,522
D)$130,051

Question 80

Solve the problem. Round to the nearest dollar.
Central Street bought a rolling machine that cost $58,000. The expected life is 600,000 hours of
Production with a salvage value of $5,800. Find the book value at the end of the third year. Use the
Units-of-production method of depreciation given the following production schedule.

A)$23,350
B)$34,650
C)$20,783
D)$17,550