Chapter 11 MC

A plant asset with five year estimated useful life and no residual value is sold at the end of the second year of its useful life. (chart)

gain: decrease / loss: increase (B)

A major objective of MACRS for tax depreciation is to

help companies achieve a faster write off of their capital assets (C)

The computation of depreciation under MACRS differs from the GAAP computation except for

the determination of asset cost (C)

A change in estimate should

be handled in current and future periods (B)

Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should

include a credit to the equipment accumulated depreciation account (B)

Depletion expense

is usually part of cost of goods sold (A)

For the composite method, the composite

life is the total depreciable cost divided by the total annual depreciation (D)

A general description of the depreciation methods applicable to major classes of depreciable assets

should be included in corporate financial statements or notes thereto (D)

A depreciable asset has an estimated 15% salvage value. (chart)

straight line: no / productive output: no (D)

Net income is understated if, in the first year, estimated salvage value is excluded from the depreciation computation when using straight line or production use method (chart)

straight line: yes / production or use: yes (B)

The book value of a plant asset is

the asset's acquisition cost less the total related depreciation recorded to date (B)

Usually, companies compute depletion for accounting purposes using a

units of production method (D)