ACCOUNTING 405 EXAM 3 QUESTIONS AND ANSWERS WITH COMPLETE SOLUTION.
Personal Property - (ANSWER)Tangible assets such as equipment and machinery
Real Property - (ANSWER)buildings and land
Intangible assets - (ANSWER)nonphysical assets
Natural Resources - (ANSWER)commodities such as oil, timber, and gold
Subtracted prior depreciation allowed or allowable on the asset
add costs necessary to prepare the asset for use in the business
start with the assets original basis - (ANSWER)Choose the items included in the calculation of an asset's
adjusted basis
subtracted prior depreciation allowed or allowable on the asset
add costs necessary to prepare the asset for use in the business
add accumulated depreciation actually taken on the asset
start with the assets OG basis
subtract ordinary repair expenses
add additional costs for routine maintenance on the asset
a. 5000 - (ANSWER)Harry inherited 100 shares of stock from his aunt upon her death. Harry's aunt
purchased the stock 10 years ago for $20 per share. The stock was worth $50 per share on the date she
died. What is the amount of Harry's basis in the stock
a. 5000
b. 20
c. 2000
d. 50
, ACCOUNTING 405 EXAM 3 QUESTIONS AND ANSWERS WITH COMPLETE SOLUTION.
False
the business also needs to know the applicable depreciation convention (e.g half year or mid quarter) to
be used as well as the date placed in service - (ANSWER)True or false: in order to calculate MACRS
depreciation, the business needs to know the asset's original cots, recovery period, and which
depreciation method (i.e double declining balance) is used. No other info is required
personal property, and personal use property - (ANSWER)Antoine owns a car. He uses the car for
personal transportation. Which is the applicable classifications of the car
income producing property
investment property
personal property
personal use property
business property
real property
d. MACRS 200% declining balance - (ANSWER)Which depreciation method is most likely to be used by
profitable businesses with high marginal tax rates
a. Alternative depreciation system
b. Units of activity depreciation method
c. Straight line
d. MACRS 200% declining balance
a. The new machinery can be depreciated using the same method or different method than the
previously purchased machinery - (ANSWER)Lucky started a new business last year. Since it was the first
year of operation, the business purchased $10,000 in machinery and used the straight-line method for
deprecation. Business is booming, so lucky purchased $15000 in equipment during the current year to
help meet production demands. Which of the following statements is true regarding the depreciation
choices available to lucky.
Personal Property - (ANSWER)Tangible assets such as equipment and machinery
Real Property - (ANSWER)buildings and land
Intangible assets - (ANSWER)nonphysical assets
Natural Resources - (ANSWER)commodities such as oil, timber, and gold
Subtracted prior depreciation allowed or allowable on the asset
add costs necessary to prepare the asset for use in the business
start with the assets original basis - (ANSWER)Choose the items included in the calculation of an asset's
adjusted basis
subtracted prior depreciation allowed or allowable on the asset
add costs necessary to prepare the asset for use in the business
add accumulated depreciation actually taken on the asset
start with the assets OG basis
subtract ordinary repair expenses
add additional costs for routine maintenance on the asset
a. 5000 - (ANSWER)Harry inherited 100 shares of stock from his aunt upon her death. Harry's aunt
purchased the stock 10 years ago for $20 per share. The stock was worth $50 per share on the date she
died. What is the amount of Harry's basis in the stock
a. 5000
b. 20
c. 2000
d. 50
, ACCOUNTING 405 EXAM 3 QUESTIONS AND ANSWERS WITH COMPLETE SOLUTION.
False
the business also needs to know the applicable depreciation convention (e.g half year or mid quarter) to
be used as well as the date placed in service - (ANSWER)True or false: in order to calculate MACRS
depreciation, the business needs to know the asset's original cots, recovery period, and which
depreciation method (i.e double declining balance) is used. No other info is required
personal property, and personal use property - (ANSWER)Antoine owns a car. He uses the car for
personal transportation. Which is the applicable classifications of the car
income producing property
investment property
personal property
personal use property
business property
real property
d. MACRS 200% declining balance - (ANSWER)Which depreciation method is most likely to be used by
profitable businesses with high marginal tax rates
a. Alternative depreciation system
b. Units of activity depreciation method
c. Straight line
d. MACRS 200% declining balance
a. The new machinery can be depreciated using the same method or different method than the
previously purchased machinery - (ANSWER)Lucky started a new business last year. Since it was the first
year of operation, the business purchased $10,000 in machinery and used the straight-line method for
deprecation. Business is booming, so lucky purchased $15000 in equipment during the current year to
help meet production demands. Which of the following statements is true regarding the depreciation
choices available to lucky.
