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An asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much depreciation is deducted in the fourth year of use if the straight line method of depreciation was used?a. $667b. $1,000c. $2,000d. None

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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An asset costing $17,000 was purchased on 01/01/15. It had an estimated useful life of 5 years and an estimated residual value of $2,000. If the company uses the Straight Line Method of depreciation, then the accumulated depreciation at the end of the fifth and final year would be:

25.Which of the following items does not affect the calculation of depreciation expense?

A.Economic benefits generated by the asset

B.Useful life of the asset

C.Residual value of the asset

D.Capitalized cost of the asset

26.Which of the following statements is correct when the straight-line method is used to compute depreciation?

A.The carrying value of an asset is a constant amount during the asset's useful life

B.Accumulated depreciation is a constant amount during the asset's estimated useful life

C.Depreciation Expense is a constant amount each year

D.The book value of an asset is an increasing amount during the asset's useful life

27.One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:

A.reduces book value below residual value.

B.does not consider the useful life of the asset in the calculation of depreciation.

C.cannot be used for tax purposes.

D.uses book value instead of depreciable cost in the calculation of depreciation.

28.Why don't all companies use the same depreciation method?

A.US income tax regulations require that a company use the same depreciation method for both financial reporting and income taxes.

B.Different depreciation methods might better reflect the pattern in which assets' economic benefits are used.

C.All companies do use the same depreciation method.

D.Only large companies are allowed to use some of the more complicated depreciation methods.

Wardell Company purchased a minicomputer on January 1, 2016, at a cost of $54,000. The computer was depreciated using the straight-line method over an estimated five-year life with an estimated residual value of $6,000. On January 1, 2018, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $3,600.

Required:
1. Prepare the year-end journal entry for depreciation in 2018. No depreciation was recorded during the year.
2. Prepare the year-end journal entry for depreciation in 2018. Assume that the company uses the sum-of-the-years' -digits method instead of the straight-line method.

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