108) Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is
expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the straight-line method, depreciation expense for 2022 and the book value at December 31,
2022, would be:
A) $12,000 and $36,000.
B) $12,000 and $31,000.
C) $11,000 and $33,000.
D) $11,000 and $38,000.
109) Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is
expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the double-declining balance method, depreciation expense for 2021 would be:
A) $24,000.
B) $22,000.
C) $19,000.
D) $20,000.
110) Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is
expected to have a five-year service life, with a residual value of $5,000 at the end of five years.
Using the double-declining balance method, depreciation expense for 2022 would be:
A) $22,000.
B) $13,200.
C) $14,400.
D) $24,000.
111) Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is
expected to have a five-year life, with a residual value of $5,000 at the end of five years.
Using the double-declining balance method, the book value at December 31, 2022, would be:
A) $21,600.
B) $24,800.
C) $36,000.
D) $45,600.
112) A machine has a cost of $15,000, an estimated residual value of $3,000, and an estimated
useful life of four years. The machine is being depreciated on a straight-line basis. At the end of the
second year, what amount will be reported for accumulated depreciation?
A) $9,000.
B) $6,000.
C) $7,500.
D) $3,000.
113) A building was purchased for $50,000. The asset has an expected useful life of six years and
depreciation expense each year is $8,000 using the straight-line method. What is the residual value
of the building?
A) $0.
B) $2,000.
C) $4,000.
D) $6,000.
114) A company purchases a piece of equipment on January 1, 2021, for $70,000 and the
equipment has an expected useful life of five years. Its residual value is estimated to be $10,000.
Assuming the company uses the straight-line depreciation method, what should be the balance in
accumulated depreciation for the equipment as of December 31, 2023 (three years later)?
A) $44,000.
B) $32,000.
C) $36,000.
D) $42,000.
115) Equipment with a cost of $390,000 and estimated residual value of $60,000 is expected to
have a useful life of 30,000 hours. During August, the equipment was operated 700 hours. What
amount should be recorded as depreciation expense for the month?
A) $8,400.
B) $7,700.
C) $9,100.
D) $7,000.
116) A company purchased a delivery truck on January 1, 2021, for $65,000. The truck has an
estimated life of 10 years and an estimated residual value of $5,000. If the company uses
straight-line depreciation, what would be the book value after four years?
A) $41,000.
B) $60,000.
C) $36,000.
D) $24,000.
117) A company purchased a delivery truck on January 1, 2021, for $100,000. The truck has an
estimated life of 10 years and an estimated residual value of $10,000. If the company uses
double-declining balance, what would be the book value of the truck after two years?
A) $64,000.
B) $76,000.
C) $82,000.
D) $54,000.
118) A company purchased a machine for $100,000 on October 1, 2021. The estimated service life
is 10 years with a $10,000 residual value. The company records partial-year depreciation based on
the number of months in service. Depreciation expense for the year ended December 31, 2021,
using straight-line depreciation, is:
A) $1,500.
B) $7,500.
C) $2,250.
D) $2,500.
119) A company purchased equipment for $240,000 on March 1, 2021. The estimated service life
is six years with a $60,000 residual value. The company records partial-year depreciation based on
the number of months in service. Depreciation expense for the year ended December 31, 2021,
using straight-line depreciation, is:
A) $33,333.
B) $40,000.
C) $30,000.
D) $25,000.
120) Best Construction purchased a delivery truck on June 1, 2021. The following information is
available:
Cost = $90,000
Estimated service life = 5 years
Estimated residual value = $15,000
Calculate depreciation expense for the year ended December 31, 2021, using straight-line
depreciation.
A) $8,750.
B) $15,000.
C) $6,250.
D) $18,000.
121) Best Construction purchased a delivery truck on June 1, 2021. The following information is
available:
Cost = $90,000
Estimated service life = 5 years
Estimated residual value = $15,000
Calculate depreciation expense for the year ended December 31, 2022, using straight-line
depreciation.
A) $8,750.
B) $15,000.
C) $6,250.
D) $18,000.
122) Best Construction purchased a delivery truck on June 1, 2021. The following information is
available:
Cost = $90,000
Estimated service life = 5 years
Estimated residual value = $15,000
Calculate the balance of accumulated depreciation for the year ended December 31, 2022, using
straight-line depreciation.
A) $21,250.
B) $17,500.
C) $23,750.
D) $30,000.
123) A company purchased office equipment for $130,000 on March 1, 2021. The estimated
service life is four years with a $40,000 residual value. The company records partial-year
depreciation based on the number of months in service. The balance of accumulated depreciation
for the year ended December 31, 2022, using straight-line depreciation, is:
A) $41,250.
B) $22,500.
C) $88,750.
D) $18,750.
124) A company purchased a computer system at a cost of $40,000. The estimated useful life is 10
years, and the estimated residual value is $5,000. Assuming the company uses the
double-declining-balance method, what is the depreciation expense for the second year?
A) $8,000.
B) $7,000.
C) $5,600.
D) $6,400.
125) A company purchased a piece of equipment for $50,000 and the equipment has an expected
useful life of five years. Its residual value is estimated to be $4,000. Assuming the company uses
the double-declining-balance depreciation method, what is the depreciation expense for the
equipment for the second full year?
A) $9,200.
B) $9,040.
C) $12,000.
D) $11,040.
126) During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles,
respectively, to deliver merchandise to its customers. The company originally purchased the truck
for $175,000. If the truck has an estimated life of 10 years or 300,000 miles, and an estimated
residual value of $25,000, what amount of depreciation expense should Supplies, Inc. record in the
second year using the activity-based method?
A) $11,000.
B) $18,500.
C) $7,500.
D) $16,000.
127) On January 1, 2021, a company purchased a machine that cost $500,000 and had a residual
value of $50,000. The machine is expected to produce 360,000 units and is estimated to last 10
years. If 25,000 units were produced in 2022 and 35,000 were produced in 2023, what amount of
accumulated depreciation is reported at the end of 2022 using the activity-based method (rounded
to the nearest whole dollar if necessary)?
A) $43,750.
B) $90,000.
C) $75,000.
D) $31,200.
128) A company purchased a tractor on January 1, 2021, for $65,000. The tractor’s useful life is
estimated to be 30,000 miles with an expected residual value of $5,000. If the company used the
tractor 5,000 miles in 2021 and 3,000 miles in 2022, what is the balance for accumulated
depreciation at the end of 2022 using the activity-based method?
A) $38,000.
B) $6,000.
C) $16,000.
D) $10,000.
129) A company purchased equipment at the beginning of 2021 for $500,000. The equipment is
depreciated on a straight-line basis with an estimated useful life of nine years and a $50,000
residual value. At the beginning of 2024, the company revised the equipment’s useful life to a total
of seven years (four more years) because of changing customer demand. The company also revised
the expected residual value to $30,000. What depreciation expense would the company record for
the year 2024 on this equipment?
A) $87,500.
B) $80,000.
C) $50,000.
D) $75,000.
130) A company purchased equipment at the beginning of 2021 for $650,000. In 2021 and 2022,
the company depreciated the asset on a straight-line basis with an estimated useful life of eight
years and a $10,000 residual value. At the beginning of 2023, due to changes in technology, the
company revised the useful life to a total of six years (four more years) with zero residual value.
What depreciation expense would the company record for the year 2023 on this equipment?
A) $108,333.
B) $106,667.
C) $122,500.
D) $81,667.
131) Which of the following intangible assets is not amortized?
A) Patents.
B) Copyrights.
C) Franchises.
D) Goodwill.
132) Which of the following intangible assets may or may not be amortized depending on whether
it has a finite or an indefinite life?
A) Patents.
B) Copyrights.
C) Goodwill.
D) Trademarks.
133) Which of the following intangible assets has an indefinite useful life?
A) Patents.
B) Copyrights.
C) Franchises.
D) Goodwill.
134) Which of the following amortization methods is most commonly used?
A) Straight-line.
B) Double-declining-balance.
C) Activity-based.
D) A combination of methods.
135) Which of the following statements is true regarding the amortization of intangible assets?
A) The expected residual value of most intangible assets is zero.
B) The service life of an intangible asset is always equal to its legal life.
C) Intangible assets with a limited useful life are not amortized.
D) In recording amortization, an accumulated amortization account is always used.
136) Bricktown Exchange purchases a copyright for $50,000. The copyright has a remaining legal
life of 25 years, but only an expected useful life of five years with no residual value. Assume the
company uses the straight-line method to record amortization.
What is the amortization expense for the first year?
A) $0.
B) $2,000.
C) $3,333.
D) $10,000.
137) Bricktown Exchange purchases a copyright for $50,000. The copyright has a remaining legal
life of 25 years, but only an expected useful life of five years with no residual value. Assume the
company uses the straight-line method to record amortization.
What is the carrying value of the copyright at the end of the first year?
A) $0.
B) $10,000.
C) $50,000.
D) $40,000.
138) Bricktown Exchange purchases a copyright for $50,000. The copyright has a remaining legal
life of 25 years, but only an expected useful life of five years with no residual value. Assume the
company uses the straight-line method to record amortization.
What is the carrying value of the copyright at the end of the second year?
A) $10,000.
B) $40,000.
C) $50,000.
D) $30,000.
139) Berry Co. purchases a patent on January 1, 2021, for $40,000 and the patent has an expected
useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method,
what is the amortization expense for the year ended December 31, 2022?
A) $0.
B) $8,000.
C) $16,000.
D) $40,000.
140) Berry Co. purchases a patent on January 1, 2021, for $40,000 and the patent has an expected
useful life of five years with no residual value. Assuming Berry Co. uses the straight-line method,
what is the carrying value of the patent on December 31, 2022?
A) $21,000.
B) $33,000.
C) $24,000.
D) $26,000.
141) Charco purchased a franchise from Burger Master on January 1, 2021, for $240,000. The
franchise agreement allows Charco to sell hamburgers and other related food items using the
Burger Master name for a period of six years. Assuming Charco uses the straight-line method,
what is the amortization expense for the year ended December 31, 2021?
A) $0.
B) $28,000.
C) $40,000.
D) $240,000.
142) Charco purchased a franchise from Burger Master on January 1, 2021, for $240,000. The
franchise agreement allows Charco to sell hamburgers and other related food items using the
Burger Master name for a period of 6 years. Assuming Charco uses the straight-line method, what
is the carrying value of the franchise on December 31, 2022?
A) $120,000.
B) $80,000.
C) $240,000.
D) $160,000.
143) When a company reports a gain on the sale of a depreciable asset, which of the following is
always true?
A) The company sold the asset for more than its fair value.
B) The company sold the asset for more than its book value.
C) The company sold the asset before its useful life was over.
D) The company sold the asset for more than it was worth.
144) When a company reports a loss on the sale of a depreciable asset, which of the following is
always true?
A) The company sold the asset for less than accumulated depreciation.
B) The company sold the asset for less than fair value.
C) The company sold the asset for less than book value.
D) The company sold the asset before the useful life was over.
145) Equipment was sold for $50,000. The equipment was originally purchased for $85,000. At
the time of the sale, the equipment had accumulated depreciation of $30,000. Calculate the gain or
loss to be recorded on the sale of equipment.
A) Gain of $20,000.
B) Loss of $5,000.
C) Loss of $35,000.
D) Gain of $5,000.
146) Equipment was sold for $40,000. The equipment was originally purchased for $75,000. At
the time of the sale, the equipment had accumulated depreciation of $50,000. Calculate the gain or
loss to be recorded on the sale of equipment.
A) Gain of $10,000.
B) Loss of $15,000.
C) Loss of $35,000.
D) Gain of $15,000.
147) A company purchased a computer that cost $10,000. It had an estimated useful life of five
years and no residual value. The computer was depreciated by the straight-line method and was
sold at the end of the fourth year of use for $3,000 cash. The company should record:
A) a gain of $1,000.
B) a loss of $1,000.
C) neither a gain nor a loss—the computer was sold at its book value.
D) neither a gain nor a loss—the gain that occurred in this case would not be recognized.
148) A company purchased a computer that cost $10,000. It had an estimated useful life of five
years and no residual value. The computer was depreciated by the straight-line method and was
sold at the end of the second year of use for $5,000 cash. The company should record:
A) a loss of $1,000.
B) a gain of $1,000.
C) neither a gain nor a loss—the computer was sold at its book value.
D) neither a gain nor a loss—the gain that occurred in this case would not be recognized.