The Effect of Amortization Chapter 10

Determine the effect on a company’s Assets and Net Income from the following transaction: a patent is amortized at year end.

The Effect of Capital vs Revenue Expenditures Chapter 10

If an expenditure is treated as a revenue expenditure, instead of as a capital expense, which of the following statements is true?

1. The current year’s net income will be higher and future depreciation expense will be higher.
2. The current year’s net income will be lower and future depreciation expense will be higher.
3. The current year’s net income will be higher and future depreciation will be lower
4. The current year’s net income will be lower and future depreciation will be lower.

Calculating Depreciation using DDB Chapter 10

The following is available for a company’s machine on December 31, Year 1:

1. $864
2. $1,824
3. $1,164
4. $840
5. $660

Change in Depreciation Chapter 10

The following is available for a company’s machine on January 1, Year 3:

On January 1, Year 3 a major overhaul was made on the machine costing $5,000 and the total estimated useful life was extended 4 years. Depreciation expense for year the year ending December 31, Year 3 is:

1. $3,000
2. $2,900
3. $3,200
4. $3,700
5. $3,100

Failure to Record Depreciation Chapter 10

Failure to record depreciation expense for the year has what affect on the following: