AFC Depreciation and Amortization 2

Question 1

For an asset with a 4-year useful life, what is the sum of years digits used in the sum-of-years-digits depreciation method?

Accepted Answer

10

Answer

6

Answer

8

Answer

12

Question 2

Under the double-declining balance method, the depreciation rate applied to book value is:

Accepted Answer

Twice the straight-line rate

Answer

The straight-line rate

Answer

Half the straight-line rate

Answer

Three times the straight-line rate

Question 3

Which type of long-term asset is subject to depletion rather than depreciation?

Accepted Answer

Natural resources such as oil or timber

Answer

Buildings

Answer

Office equipment

Answer

Patents

Question 4

When an asset is fully depreciated, its book value equals:

Accepted Answer

Its salvage value

Answer

Zero

Answer

Its original cost

Answer

Its replacement cost

Question 5

How is depreciation expense classified on the income statement?

Accepted Answer

A non-cash expense that reduces net income

Answer

A cash expense that reduces net income

Answer

A variable expense tied to revenue

Answer

A direct production cost only

Question 6

Which account is credited when recording a period's depreciation expense?

Accepted Answer

Accumulated Depreciation

Answer

Depreciation Expense

Answer

The asset account directly

Answer

Cash

Question 7

An asset has an original cost of $80,000, a salvage value of $8,000, and a useful life of 8 years. What is the straight-line depreciation rate?

Accepted Answer

12.5%

Answer

10%

Answer

15%

Answer

8%