101.In computing depreciation, residual value is
a.the fair value of a plant asset on the date of acquisition.
b.subtracted from accumulated depreciation to determine the plant asset's depreciable cost.
c.an estimate of a plant asset's value at the end of its useful life.
d.ignored in all the depreciation methods.
102.When estimating the useful life of an asset, accountants do not consider
a.the cost to replace the asset at the end of its useful life.
b.obsolescence factors.
c.expected repairs and maintenance.
d.the intended use of the asset.
103.Useful life is expressed in terms of time, units of activity, or units of output expected from the asset under the
a.declining-balance method.
b.straight-line method.
c.units-of-activity method.
d.none of these answer choices are correct.
104.Equipment was purchased for $120,000. Freight charges amounted to $5,600 and there was a cost of $16,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $24,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be
a.$28,320.
b.$23,520.
c.$19,680.
d.$19,200.
105.A truck was purchased for ¥180,000 and it was estimated to have a ¥36,000 residual value at the end of its useful life. Monthly depreciation expense of ¥3,000 was recorded using the straight-line method. The annual depreciation rate is
a.20%.
b.2%.
c.8%.
d.25%.
106.A company purchased factory equipment on April 1, 2014 for €160,000. It is estimated that the equipment will have a €20,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is
a.€16,000.
b.€14,000.
c.€10,500.
d.€12,000.
107.A company purchased office equipment for $50,000 and estimated a residual value of $10,000 at the end of its 5-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is
a.20%.
b.25%.
c.40%.
d.4%.
108.The declining-balance method of depreciation produces
a.a decreasing depreciation expense each period.
b.an increasing depreciation expense each period.
c.a declining percentage rate each period.
d.a constant amount of depreciation expense each period.
109.A company purchased factory equipment for ¥1,400,000. It is estimated that the equipment will have a ¥140,000 residual value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be
a.¥560,000.
b.¥336,000.
c.¥504,000.
d.¥241,920.
110.The units-of-activity method is generally not suitable for
a.airplanes.
b.buildings.
c.delivery equipment.
d.factory machinery.