Multiple choice

1. A machine costs $40,000, has a salvage value of $8,000, and is expected to have a useful life of 100,000 hours. If it is utilized for a total of 8,000 hours in year one, what is the depreciation expense based on the unit-of-production-method at the end of the year?

A. $2,560 

B. $3,200 

C. $4,000 

D. $25,000 

2. Baker Company purchases a new delivery truck for $20,000. The truck is expected to have a useful life of 90,000 miles before replacement, and a salvage value of $2,000. In its first year the truck was driven 22,000 miles, and a further 19,000 miles in year two. What is the depreciation expense and book value at the end of year two?

A. $3,800; $11,800 

B. $4,400; $11,200 

C. $4,222.22; $10,888.88 

D. $8,200; $9,800 

3. A delivery truck is purchased for $38,000, has a salvage value of $6,000 and is depreciated using MACRS. What is the first-year depreciation expense?

A. $4,578.80 

B. $5,430.20 

C. $7,600.00 

D. $15,200.00 

4. Dennison Property Company purchases a new office space for lease to small businesses for $2,400,000, including a land value of $400,000. The property is placed in service on March 15, 1999. Using MACRS, what is the depreciation on this property at the end of its first year?

A. $40,660 

B. $43,656 

C. $50,260 

D. $57,850