Module 3 Farm Management Quiz

The Double Declining Balance method of will result in more depreciation in the first few years of an asset life than the straight-line method. True False

True

Which of the following assets can be depreciated? (more than one correct answer) a farm pond a grain bin cows that were bought and sold within the same year feeder pigs

a farm pond a grain bin

Use the table above to calculate thefirst year MACRS depreciation for a new bull that cost $10,000 $1,000 $1,500 $2,500 $4,000

$1,500

What is the depreciation for the FIRST year of an asset that costs $50,000 and has a useful life of 10 years using the Double Declining Balance method.

$10,000

A combine purchased for $110,000 has a $10,000 salvage and a useful life of 5 year. If it is purchased July 1, what would the first year partial depreciation be using the straightline method? Selected Answer: Incorrect [None Given] Answers: $5000 $10000 $15000 $20000

$10000

Bob bought a new bull for $4000. He figures the salvage value is $1000 and the useful life is 4 years. Using the double decling balance method, what is the depreciation Bob can claim in the 1st year?

$2000

Ima Farmer bought a truck for $28,000. It has a salvage value of $3,000 and a 5 year useful life. What is the annual depreciation cost for this truck? $1500 $2000 $2500 $3000

$2500

What would be the first year depreciation for a $30,000 truck using the MACRS straight-line method? $3,000 $4,500 $6,000 $7,500

$3,000

Phil bought a new truck. He traded in of his old truck that had a book value of $10,000. He paid $5,000 cash down and will pay the balance of $20,000 over the next 3 years. What is the depreciation basis for his new truck? $10,000 $15,000 $20,000 $35,000

$35,000

Dur T. Farmer purchased a tractor for $50,000 and also traded in his old tractor that a value of $6,000. What is the adjusted tax basis for the new tractor? $44,000 $50,000 $56,000 none of these

$56,000

Sam bought a new bull for $2500. If he figures the bull's salvage value to be $700 and the useful life to be 3 years, what is the annual depreciation Sam can take for the bull if he uses the straight-line method? $160 $240 $480 $600

$600

What is the depreciation for the SECOND year of an asset that costs $50,000, has a $5,000 salvage value, and a useful life of 10 years using the Double Declining Balance method.

$8000

Which is the correct formula to calculate straight-line depreciation? (cost - salvage value) x years of useful life (cost + salvage value) x years of useful life (cost - salvage value) / years of useful life (cost + salvage value) x years of useful life

(cost - salvage value) / years of useful life

If a purchased asset has a useful life of 10 years, what is the % deprecation factor that would be be used if you used the Straight Line method? 10 20 25 any of these is acceptable

10

What is the depreciation for the FIRST year of an asset that costs $60,000 and a useful life of 5 years, using the Double Declining Balance method. 6000 12000 18000 24000

24000

Tractors and most farm equipment are in which property class? 3 year class 5 year class 7 year class 10 year class

7 year class

As a manager, you expects higher revenue this year and wish to decrease the taxable income by increasing expenses. Which depreciation would you use to accomplish this? MACRS system, straight-line MACRS system, alternate depreciation system (ADS) MACRS system, 150% declining balance all would be similar in their results

MACRS system, 150% declining balance

Land can not be depreciated but improvements to the land such as fences and terraces can be. True False

True

An asset with a 7 year life under the MACRS system will depreciate out over 8 years. True False

True

The total depreciation over an asset's useful life is equal to: Selected Answer: Incorrect [None Given] Answers: cost plus salvage value cost minus salvage value book value salvage value

cost minus salvage value

Which asset would be classified as a five year property class? tractors and equipment farm trucks single use buildings breeding swine

farm trucks

Bill built a new tractor shed for $20,000. If he used the MACRS straight-line method, what will be his amount for depreciation the first year? $2,000 $4,000 $5,000 none of these

none of these

Carla bought 10 feeder steers for $700 each. How much annual depreciation can she claim? can't tell because we don't know the salvage value none, because feeder steers are not depreciable not sure because we don't known the useful life $100 per head is the maximum on feeder cattle

none, because feeder steers are not depreciable

Which of the following can NOT be depreciated? purchased breeding animals equipment and machinery raised breeding animals buildings

raised breeding animals

Allison bought a sprayer for $8,000. It has a salvage value of $1,000 and a useful life of 10 years. Which best describes the annual depreciation for the sprayer using the straight line method? the depreciation will be highest in the first year and decrease with each year the depreciation will be the lowest in the first year and will increase with each year the depreciation is the same for each year depreciation can only be claimed for the first 5 years and will be the same for each year

the depreciation is the same for each year