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Intermediate Accounting 1 Questions and
Correct Answers
Prentice Company purchased a depreciable asset for $200,000. The estimated
salvage value is $20,000, and the estimated useful life is 10 years. The
straight-line method will be used for depreciation. What is the depreciation base
of this asset?
Ans✅✅: $200,000 - $20,000 = $180,000.
Harrison Company purchased a depreciable asset for $100,000. The estimated
salvage value is $10,000, and the estimated useful life is 10 years. The
straight-line method will be used for depreciation. What is the depreciation base
of this asset?
Ans✅✅: $100,000 - $10,000 = $90,000.
Lennon Company purchased a depreciable asset for $200,000. The estimated
salvage value is $10,000, and the estimated useful life is 10,000 hours. Lennon
used the asset for 1,100 hours in the current year. The activity method will be
used for depreciation. What is the depreciation expense on this asset?
Ans✅✅: [$200,000 - $10,000) ÷ 10,000] × 1,100 = $20,900.
Starr Company purchased a depreciable asset for $150,000. The estimated
salvage value is $10,000, and the estimated useful life is 8 years. The double-
declining balance method will be used for depreciation. What is the depreciation
expense for the second year on this asset?
Ans✅✅: $150,000 × [(1 ÷ 8) × 2] = $37,500
($150,000 - $37,500) × [(1 ÷ 8) × 2] = $28,125.
Bigbie Company purchased a depreciable asset for $600,000. The estimated
salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie
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used the asset for 1,100 hours in the current year. The activity method will be
used for depreciation. What is the depreciation expense on this asset?
Ans✅✅: [($600,000 - $30,000) ÷ 10,000] × 1,100 = $62,700.
Pine Company purchased a depreciable asset for $360,000. The estimated
salvage value is $24,000, and the estimated useful life is 8 years. The double-
declining balance method will be used for depreciation. What is the depreciation
expense for the second year on this asset?
Ans✅✅: $360,000 × [(1 ÷ 8) × 2] = $90,000($360,000 - $90,000) × [(1 ÷
8) × 2] = $67,500.
On July 1, 2006, Rodriguez Corporation purchased factory equipment for
$150,000. Salvage value was estimated to be $4,000. The equipment will be
depreciated over ten years using the double-declining balance method.
Counting the year of acquisition as one-half year, Gonzalez should record
depreciation expense for 2007 on this equipment of
Ans✅✅: [$150,000 - ($150,000 × 0.1)] × 0.2 = $27,000.
Norris Corporation purchased factory equipment that was installed and put into
service January 2, 2006, at a total cost of $60,000. Salvage value was
estimated at $4,000. The equipment is being depreciated over four years using
the double-declining balance method. For the year 2007, Norris should record
depreciation expense on this equipment of
Ans✅✅: [$60,000 × (1 - 0.5)] × 0.5 = $15,000.
On April 13, 2006, Foley Co. purchased machinery for $120,000. Salvage value
was estimated to be $5,000. The machinery will be depreciated over ten years
using the double-declining balance method. If depreciation is computed on the
basis of the nearest full month, Foley should record depreciation expense for
2007 on this machinery of
Ans✅✅: [$69,000 - ($69,000 × 0.4)] × 0.4 = $16,560.
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Intermediate Accounting 1 Questions and
Correct Answers
Prentice Company purchased a depreciable asset for $200,000. The estimated
salvage value is $20,000, and the estimated useful life is 10 years. The
straight-line method will be used for depreciation. What is the depreciation base
of this asset?
Ans✅✅: $200,000 - $20,000 = $180,000.
Harrison Company purchased a depreciable asset for $100,000. The estimated
salvage value is $10,000, and the estimated useful life is 10 years. The
straight-line method will be used for depreciation. What is the depreciation base
of this asset?
Ans✅✅: $100,000 - $10,000 = $90,000.
Lennon Company purchased a depreciable asset for $200,000. The estimated
salvage value is $10,000, and the estimated useful life is 10,000 hours. Lennon
used the asset for 1,100 hours in the current year. The activity method will be
used for depreciation. What is the depreciation expense on this asset?
Ans✅✅: [$200,000 - $10,000) ÷ 10,000] × 1,100 = $20,900.
Starr Company purchased a depreciable asset for $150,000. The estimated
salvage value is $10,000, and the estimated useful life is 8 years. The double-
declining balance method will be used for depreciation. What is the depreciation
expense for the second year on this asset?
Ans✅✅: $150,000 × [(1 ÷ 8) × 2] = $37,500
($150,000 - $37,500) × [(1 ÷ 8) × 2] = $28,125.
Bigbie Company purchased a depreciable asset for $600,000. The estimated
salvage value is $30,000, and the estimated useful life is 10,000 hours. Bigbie
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used the asset for 1,100 hours in the current year. The activity method will be
used for depreciation. What is the depreciation expense on this asset?
Ans✅✅: [($600,000 - $30,000) ÷ 10,000] × 1,100 = $62,700.
Pine Company purchased a depreciable asset for $360,000. The estimated
salvage value is $24,000, and the estimated useful life is 8 years. The double-
declining balance method will be used for depreciation. What is the depreciation
expense for the second year on this asset?
Ans✅✅: $360,000 × [(1 ÷ 8) × 2] = $90,000($360,000 - $90,000) × [(1 ÷
8) × 2] = $67,500.
On July 1, 2006, Rodriguez Corporation purchased factory equipment for
$150,000. Salvage value was estimated to be $4,000. The equipment will be
depreciated over ten years using the double-declining balance method.
Counting the year of acquisition as one-half year, Gonzalez should record
depreciation expense for 2007 on this equipment of
Ans✅✅: [$150,000 - ($150,000 × 0.1)] × 0.2 = $27,000.
Norris Corporation purchased factory equipment that was installed and put into
service January 2, 2006, at a total cost of $60,000. Salvage value was
estimated at $4,000. The equipment is being depreciated over four years using
the double-declining balance method. For the year 2007, Norris should record
depreciation expense on this equipment of
Ans✅✅: [$60,000 × (1 - 0.5)] × 0.5 = $15,000.
On April 13, 2006, Foley Co. purchased machinery for $120,000. Salvage value
was estimated to be $5,000. The machinery will be depreciated over ten years
using the double-declining balance method. If depreciation is computed on the
basis of the nearest full month, Foley should record depreciation expense for
2007 on this machinery of
Ans✅✅: [$69,000 - ($69,000 × 0.4)] × 0.4 = $16,560.
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