Reading 37: Analysis of Long-Lived Assets: Part II - Analys

答案和详解如下：

6.What is the depreciation expense for the third year, assuming Slovac uses the sum-of-years digits method of depreciation?

A)   $292.

B)   $518.

C)   $583.

D)   $1,167.

The correct answer was D)

sum-of-years digits = (8 x 9) / 2 =36

third year depreciation = (6 / 36) x ($7,500 - $500) = $1,167

7.This information pertains to equipment owned by Brigade Company.

§       Cost of equipment $10,000

§       Estimated residual value $2,000

§       Estimated useful life 5 years

§       Depreciation method Straight-line

The accumulated depreciation at the end of year 3 is:

A)   $1,600.

B)   $3,200.

C)   $4,800.

D)   $5,200.

The correct answer was C)

accumulated depreciation at the end of year 3 = [($10,000 - $2,000) / 5] x 3 = $4,800

8.After three years, Brigade expects that it will use the equipment for a total of six years (i.e., 3 more years). Brigade estimates no change in the residual value. What is the depreciation expense for year 4?

A)   $1,600.

B)   $1,733.

C)   $1,067.

D)   $800.

The correct answer was C)

[(10,000 - 4,800) - $2,000] / 3 = $1,067

9.Lakeside Co. recently determined that one of its processing machines has become obsolete three years early and, unexpectedly, has no salvage value. Which of the following statements is most consistent with this discovery?

A)   Historically, economic depreciation was understated.

B)   Lakeside Co. will owe back taxes.

C)   Historically, economic depreciation was overstated.

D)   Lakeside Co. must change its accounting principles due to its poor estimates.

The correct answer was A)

Historically, economic depreciation was understated. If an asset becomes obsolete and its useful life is less than expected, accounting methods for depreciation will understate the economic depreciation. In addition, if there is no salvage value when positive salvage value was expected, the understatement problem is compounded.

10.On January 1, 2005, JME Corporation changed from the straight line method to an accelerated method of depreciation. Under the accelerated method, the accumulated depreciation through December 31, 2004, was $600,000 higher than if the straight line method had been used. JME’s income tax rate is 40 percent. What is the cumulative effect of this change in accounting principle?

A)   $240,000.

B)   $360,000.

C)   $600,000.

D)   $0.

The correct answer was B)

600,000 × (1 – 0.4) = 360,000