21.The balance in accumulated depreciation on January 1 and December 31 is $12,000 and $9,000, respectively, during a year in which an asset with a cost of $4,000 and net book value of $0 was retired. Depreciation expense for the current year is:
a.$9,000.
b.$3,000.
c.$1,000.
d.$7,000.
22.Which one of the following depreciation methods will typically result in the smallest amount of current taxes paid during the early periods of an asset's life?
a.150% declining balance method.
b.Units of production method.
c.Double-declining-balance method.
d.Straight-line method.
23.Which one of the following depreciation methods will typically result in the smallest earnings per share during the early periods of an asset's life?
a.150% declining balance method.
b.Units of production method.
c.Double-declining-balance method.
d.Straight-line method.
24.Sandeep Inc. uses double-declining-balance depreciation for an asset with a 4-year life expectancy and no salvage value. Depreciation expense for the second year of the asset's life is calculated by:
a.[2 x Book Value]/4
b.[2 x (Cost – Salvage Value]/4
c.[(2 x Book Value)/4] – Accumulated Depreciation
d.[2 x Cost]/4
25.Kristin, Inc. depreciates its plant assets over a 10-year life with a 10% salvage value. Using straight-line depreciation, which calculation will Kristin use during year 2 of the asset's life?
a.10% x (Cost – Salvage Value)
b.(Cost – Salvage Value)/10 x 10%
c.Book Value x 10%
d.Book Value x [10% – Salvage Value]
26.Forgetting to record depreciation expense during 2010l:
a.understates the debt/equity ratio.
b.understates the current ratio.
c.overstates the debt/equity ratio.
d.overstates the current ratio.
27.If the straight-line method of depreciation of an asset with a 5-year life expectancy and no salvage value is used, then the percentage of cost that is recognized as depreciation expense for the first two years of the asset's life is, respectively,
a.25% and 25%.
b.40% and 20%.
c.40% and 40%.
d.20% and 20%.
28.On January 1, 2010, Lane Company made a $12,000 expenditure on a fully depreciated machine. The expenditure increased the expected life of the new machine for two years until December 31, 2011. Lane uses straight-line depreciation with no salvage value. However, Laneerroneously expensed this capital expenditure. As a result of this error,
a.2010 income is overstated by $3,000 and 2011 income is understated by $3,000.
b.2010 income is understated by $6,000 and 2011 income is overstated by $6,000.
c.2010 income is understated by $6,000 and 2011 income is overstated by $3,000.
d.2010 income is understated by $6,000 and 2011 income is correctly stated.
29.A machine was purchased on January 1 for $50,000. The machine has an estimated useful life of 10 years with a salvage value of $2,000. Under the double-declining-balance, depreciation expense for each of the first two years is, respectively,
a.$12,000 and $12,000.
b.$10,000 and $8,000.
c.$12,000 and $9,500.
d.$12,500 and $12,500.
30.A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 5 years with a salvage value of $10,000. Under the double-declining-balance method, depreciation expense for each of the first two years is, respectively,
a.$45,000 and $22,500.
b.$40,000 and $24,000.
c.$45,000 and $ 27,500.
d.$22,500 and $ 22,500.