Question

Under group and composite depreciation methods, gains and losses on the disposal of individual assets need not be computed. T/F 2.Which of the following typically refers to the process of allocating the cost of long-term intangible assets used in the business over future periods? Multiple Choice Depreciation. Amortization. Depletion. Impairment. 3.Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. Using the straight-line method, the book value at December 31, 2018, would be: Multiple Choice $57,600. $51,600. $58,800. $52,800.

3.

On June 30, 2018, Prego Equipment purchased a precision laser-guided steel punch that has an expected capacity of 300,000 units and no residual value. The cost of the machine was $450,000 and is to be depreciated using the units-of-production method. During the six months of 2018, 24,000 units of product were produced. At the beginning of 2019, engineers estimated that the machine can realistically be used to produce only another 230,000 units. During 2019, 70,000 units were produced.

Prego would report depreciation in 2018 of:

Multiple Choice

$36,000.

$43,900.

$18,000.

$21,950.

Answer 1

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Under group and composite depreciation methods, gains and losses on the disposal of individual assets need not be computed. True

2.Which of the following typically refers to the process of allocating the cost of long-term intangible assets used in the business over future periods? Amortization

3.Cutter Enterprises :

Cost	$72,000.00
Less:Depreciation	$13,200.00
(72000-6000)/5
Book Value	$58,800.00

On June 30, 2018, Prego:

450000/300000*24000= $36,000