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1. Which of the following statements is not true?

a.Depreciation is a cost allocation process.

b.An asset's book value reflects what it can be sold for in the market.

c.An asset's book value is its cost less its accumulated depreciation.

d.A gain or loss on disposal of property, plant, and equipment is reported in income from continuing operations.

2. The total amount of depreciation expense over the life of an asset is __________ under each method; the yearly amounts of depreciation expense are __________.

a.different; different

b.the same; equal

c.the same; different

d.different; equal

3. The nature of natural resources is such that additional capital expenditures may be made in future periods. When additional capital expenditures are incurred or estimates are revised,

a.the current depletion rate is continued.

b.a new depletion rate is calculated.

c.a new depreciation rate is calculated.

d.the current depreciation rate is continued.

4. Isaiah Business Services purchased three assets with the following characteristics:

Asset	Cost	Residual Value	Life
Photocopier	$ 12,000	$ 2,000	10 years
Computer	6,800	1,200	4 years
Typewriter	1,500	250	5 years

Assuming Isaiah uses straight-line depreciation, the composite depreciation rate is

15.7%.

b.10.1%.

c.18.2%.

d.13.1%.

5. ABC Company uses a calendar year and purchases a fixed asset on March 5. Under the one-half year convention, when will ABC begin depreciating the asset?

a.July 1

b.January 1

c.January 1 of next year

d.March 1

6. Which of the following fixed assets are likely to use group depreciation?

a.Office equipment

b.Monitors

c.Machines

d.Factory equipment

7. When an asset in a group is retired, the entry to record the retirement would include

a.a disclosure in the financial statements.

b.a credit to the asset account and a debit to Accumulated Depreciation.

c.a credit to Accumulated Depreciation and a debit to the asset account.

8. ABC Company purchased land for $2,500,000 from which it expects to extract 200,000 tons of coal. The estimated residual value is $500,000. What is the unit depletion rate for the coal?

a.$4.60 per ton

b.$12.50 per ton

c.$12.00 per ton

9. A change in the estimates making up depreciation for a fixed asset will result in a recalculation of depreciation expense. This recalculation is accounted for

a.with a debit to Retained Earnings.

b.by a prior period adjustment.

c.with a credit to Retained Earnings.

d.prospectively.

d.$10.00 per ton

d.recording the gain or loss on the asset retirement.

10. On January 1, 2019, Jacob Corporation purchased equipment for $200,000. The equipment had an estimated useful life of 10 years and an estimated residual value of $40,000. Using the double-declining-balance method, how much depreciation expense should Jacob Corporation report on the company's balance sheet at December 31, 2020?

a.$32,000

b.$16,000

c.$40,000

d.$20,000

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