Kaplan University AC 300 Unit 5 Quiz -– 100% Correct Answers

1.

Question :

The factors involved in computing periodic depreciation charges for an asset do not include the

Student Answer:

method of cost allocation

current value of the asset

service life

residual value of the asset

 2.

Question :

Battle Co. purchased a new truck for $36,000 on June 1, 2010, with a useful life of eight years and a residual value of $4,800. If the company used double-declining-balance depreciation computed to the nearest whole year, the depreciation expense for 2011 was

Student Answer:

$6,750.00

$7,687.50

$5,250.00

$5,850.00

 3.

Question :

Which one of the following statements is not true?

Student Answer:

Depreciation is the process of allocating the purchase price of an asset minus its residual value to expense for each period benefited by the asset.

The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset.

The service life of an asset is the measure of the number of years of service expected from the asset before its disposal.

The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the costs of disposal.

 4.

Question :

What effect does depreciation have on the calculation of the rate of return on total assets?

Student Answer:

affects both the numerator and denominator

no effect

increases the outcome

decreases the outcome

 5.

Question :

Depreciation of an asset based on the number of hours of usage is a(n)

Student Answer:

time-based method

accelerated method

replacement method

activity-based method

 6.

Question :

Which one of the following statements is true?

Student Answer:

One objective of depreciating an asset is to provide funds for replacement.

GAAP requires the use of either straight-line or declining-balance depreciation.

Straight-line depreciation results in a decreasing rate of return on total assets.

Typically, the sum-of-the-years'-digits method will result in less depreciation expense in the year of acquisition than will the double-declining-balance method.

 7.

Question :

Related to account for the impact of inflation on fixed assets, GAAP requires

Student Answer:

management’s discretion

use of current dollars

dollars realized in future periods

GAAP is silent on the issue

 8.

Question :

Depreciation expense under the inventory system is

Student Answer:

based on cost minus residual value

basically a FIFO approach to depreciable asset accounting

the result of applying a depreciation rate to the original cost

a measure of the change in the value of the depreciable asset

 9.

Question :

Which of the following depreciation methods should be used when the expected benefits to be received from an asset will decline each period?

Student Answer:

straight-line method

units-of-production method

sum-of-the-years'-digits method

compound-interest method

 10.

Question :

On January 1, 2010, Digger purchased some equipment for $19,600. The anticipated life of the equipment was five years and residual value was estimated to be $3,100. The machine was expected to produce 600,000 units. In January of 2010, 25,000 units were produced and production was doubled in February. The company uses the activity depreciation method. What is the amount of depreciation expense for the month of February?

Student Answer:

$637.50

$1,210.00

$2,354.00

$1,375.00