Practice problem for Chapter 9
1). All of the following are intangible assets except:
a. Licensing rights
b. Equipment
c. Trademarks
d. Copyrights
2). Which of the following is not included in the acquisition of a piece of
equipment?
a. Purchase Price
b. Transportation cost
c. Routine maintenance
d. Installation costs
3). On January 1, 2008, Company ABC purchased equipment for $70,000. The
estimated salvage value is $10,000. The estimated useful life is 12 years. Using
STRAIGHT LINE depreciation, how much is the depreciation expense per year?
a. $10,000
b. $1,200
c. $5,000
d. $80,000
4). On January 1, 2009, Company C purchases equipment for $100,000. The
estimated useful life in units is 200,000 units. The estimated salvage value is
$20,000. During 2009, the equipment’s output is 15,000 unites. In the next year
(2010), the output is $25,000 units. What is the accumulated depreciation at the
end of 2010 (after 2 years)?
a. $6,000
b. $10,000
c. $16,000
d. $12,000
5). A machine cost $200,000 has an estimated residual value of $40,000, and has
an estimated useful life of four years. The company uses the double-declining
balance method to depreciate. What is the accumulated depreciation after two
years?
a. $175,000
b. $100,000
c. $120,000
d. $150,000
6). Using the same information in (question 5) what is the book value after two
years?
a. $100,000
b. $120,000
c. $50,000
d. $25,000
7). Company ABC sold a delivery truck for $16,000. They had originally
purchased the truck for $28,000, and had recorded depreciation for three years.
What is the gain or loss on disposal on the truck if the accumulated depreciation
was $15,000?
a. Loss of $1,000
b. Gain of $1,000
c. Loss of $3,000
d. Gain of $3,000