Depreciation, impairments and depletion

Multiple choice questions (MCQs) quiz

1. Depreciation is a process of:

2. Cos of the fixed asset – Salvage value = ?

3. ABC Company provides the following information:

• Cost of the equipment: $5,000
• Salvage value: $500
• Useful life of equipment: 10 years

Under straight line method, the yearly depreciation charge is:

4. The cost of a depreciable asset = ?

5. If the estimated useful life of an asset is 10 years, the straight line depreciation rate would be:

6. Accumulated depreciation account is an example of:

7. The correct journal entry for recording depreciation on equipment is:

8. Under activity method, the depreciation expense for a period is computed on the basis of:

9. Consider the following information:

• Cost of equipment: $150,000
• Salvage vale of equipment: $10,000
• No of hours the equipment has been used during the current period: 2,000 hours
• Estimated life time hours the equipment will be used: 20,000 hours
• Estimated useful life of the equipment in years: 15 years

Based on the above information, the depreciation on equipment for current period under activity method is:

10. The book value of a fixed asset is equal to:

11. Consider the following information:

• Cost of the building: $75,000
• Accumulated depreciation of building: $27,000
• Accelerated depreciation rate: 20%

Based on the above information, the depreciation expense for the current period is:

12. Which of the following is not based on estimates?

13. Consider the following information:

• Cost of the asset: $800,000
• Salvage value of the asset: $50,000
• Expected useful life of the asset: 5 years

Based on the above information, the depreciation charge for the first year of asset’s life under sum of years’ digits method would be:

14. If the estimated useful life of an asset is 7 years, the sum of years’ digits would be:

15. Which of the following is not an accelerated depreciation method?

16. Which of the following is correct about accelerated depreciation methods?