Depreciation and Recoverability Quiz
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Questions and Answers

Which of the following is the correct formula to calculate annual depreciation using the straight-line method?

  • (Cost + Residual Value) / Estimated Useful Life
  • (Cost - Residual Value) / Estimated Useful Life (correct)
  • Cost / (Estimated Useful Life - Residual Value)
  • (Cost - Residual Value) * Estimated Useful Life

    • What is the carrying value of the machinery on June 30, 2021?

  • 1,500,000
  • 3,200,000
  • 2,700,000
  • 1,350,000 (correct)

    • What is the journal entry to record the impairment loss on June 30, 2021?

  • Debit Machinery 1,890,000, Credit Accumulated Depreciation 1,890,000
  • Debit Machinery 1,540,000, Credit Accumulated Depreciation 1,540,000
  • Debit Loss on Impairment 1,540,000, Credit Machinery 1,540,000 (correct)
  • Debit Loss on Impairment 1,890,000, Credit Machinery 1,890,000

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