Fundamental Accounting Principles Volume 2 17th Edition By Kermit D. Larson test bank

169)       The cost of an asset plus its accumulated depreciation equals the asset's book value.

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170)       The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

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171)       An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.

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172)       The double-declining balance method is applied by (1) calculating the asset's straight-line depreciation rate, (2) doubling it, (3) subtracting residual value from cost, and (4) multiplying the rate times the cost.

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173)       SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000. With an estimated useful life of 10 years, the annual depreciation using the straight-line method will be $3,900 per year.

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174)       A company is required to purchase all assets at the beginning of an accounting period so that a full year's worth of depreciation can be taken.

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175)       Machinery having a four-year useful life and a residual value of $5,000 was acquired for $65,000 cash on June 28. Using the nearest whole month method, the company would recognize $11,250 for depreciation expense at the end of the first year, December 31.

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176)       A depreciable asset that is purchased on March 18 would be depreciated for nine months of the first year, if the fiscal year ends on December 31 using nearest whole month method.

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177)       The half year rule is the partial-year depreciation method that calculates depreciation by determining if the asset was used for more than half of the month.

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178)       Because depreciation is based on predictions of residual value and useful life, depreciation is an estimate.

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179)       Machinery after two years' worth of depreciation has an opening book value of $6,400. At the beginning of the third year, the predicted number of years remaining in its useful life changes from three years to four years and its estimated residual value changes from the original $1,000 to $400. The revised annual depreciation using the straight-line method is $1,500.

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180)       An asset that cost $5,000 has a current book value of $2,000. A revision of the useful life of the asset estimated that the asset has a remaining useful life of four years and a residual value of $400. Using the straight-line method, the revised depreciation will be $500 per year.