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Exam 17: Depreciation

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Question 61

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The price of a railroad car purchased by Rio Corporation was $78,600. Using the MACRS method, calculate the annual depreciation for year 3. (Round all dollar amounts to the nearest cent)

A) $34,371.78
B) $19,249.14
C) $13,747.14
D) $9,817.14

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Question 62

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The ____________________ method for calculating depreciation provides for equal periodic charges to be written off over the estimated useful life of the asset.

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Question 63

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Gracie Slick bought a new building for a total cost of $260,000. She is depreciating it over 40 years using the sum-of-the-years' digits method. What is the sum-of-the-years' digits depreciation rate fraction for year 15?

____________________ balance is the name given to the declining-balance method of depreciation when the straight-line multiple is 200%.

Calculate the total cost, total depreciation, and annual depreciation for the following asset using the straight-line method. $\begin{array} { l l l l l l l l } & & & & & & { \text { Estimated } } \\& \text { Freight } & \text { Set-up } & \text { Total } & \text { Salvage } & \text { Total } & \text { Useful } & \text { Annual } \\\text { Cost } & \text { Charges } & \text { Charges } & \text { Cost } & \text { Value } & \text { Deprec. } & \text { Life } & \text { Deprec. } \\\$ 800,000 & \$ 2,500 & \$ 16,000 & & \$ 20,000 & & 10 &\end{array}$

When the useful life of an asset is more accurately defined in terms of how much it is used rather than the passage of time, the ____________________ method is used to calculate depreciation.

Magnotti Floors purchased a floor sander for $3,550. Delivery costs totaled $225. The salvage value is $755 after 8 years. Using the straight-line depreciation method, calculate the book value at the end of year 5.

To calculate the depreciation using the units of production method, calculate the useful life in units of production rather than units of time.​

The price of a telescope purchased by Future Labs Inc. was $32,100. It cost $898 for delivery. The salvage value at the end of 3 years is $6,764. Using the 150% declining-balance depreciation method, calculate the annual depreciation for year 2. (Round the declining-balance rate to 4 decimal places, and all dollar amounts to the nearest cent)

Complete the schedule as it relates to the sum-of-the years' digits method of depreciation: $\begin{array}{c}\text {Sum of the}\quad \text {Depreciation Rate Fraction}\\\begin{array}{llllll} \text { Useful life } &\text {Years' Digits } &\text { Year 1 } & \text {Year 3 } & \text { Year 5} & \\ \text {5 years } &\\\end{array}\end{array}$

The original basis is the total price of an item excluding items like taxes and shipping costs.​