Answer Happy

Note: Answer questions (2) - (5) based on the following
information regarding the purchase of equipment.
Cost:


$5,000
Salvage value:


$1,000
Estimated useful life (in years):

4 years
Estimated useful life (in
hours):
20,000
2) Under the straight line method of depreciation, what is the
depreciation expense in the first year?
a) $
250
c) $1,250
b)
$1,000
d) $1,500
3) Under the straight line method of depreciation, what is the
net book value at the end of the second year?
a)
$1,000
c) $3,000
b)
$2,000
d) $4,000
4) Under the double declining balance method, what would be the
annual
depreciation rate?
a)
10%
c) 40%
b)
25%
d) 50%
5) Under the units of activity method, what would be the
depreciation expense if the machine was used for 6,000 hours?
a) $
600
c) $1,500
b)
$1,200
d) $4,000