Question

Question 17 (1 point) An activity-based method is most often used to allocate the cost of natural resources over its useful life because: This method generally results in the highest amount of assets in the earlier years. This is the simplest method, and natural resource activity is hard to estimate. The usefulness of natural resources generally is directly related to the amount of the resources extracted. This method generally results in the highest amount of assets in the later years. Question 18 (1 point) Broadway Ltd. purchased equipment on January 1, 2016, for $800.000, estimating a five-year useful life and no residual value. In 2016 and 2017. Broadway depreciated the asset using the straight-line method. In 2018, Broadway changed to sum of years-digits depreciation for this equipment. What depreciation would Broadway record for the year 2018 on this equipment? $120.000 $160,000 $200,000 $240.000 Question 19 (1 point) Tatsuo Corporation purchased farm equipment on January 1, 2016, for $280.000. In 2016 and 2017, Tatsuo depreciated the asset on a straight line basis with an estimated useful life of five years and a $90,000 residual value. In 2018, due to changes in technolory. Tatsuo revised the residual value to $30,000 but still plans to use the equipment for the full five years. What depreciation would Tatsuo record for the year 2018 on this equipment? $52.000. 558.000 $50,000. $28.000

Answer 1

17. The usefulness of natural resources generally is directly related to the amount of the resources extracted.

18	$240,000
	Cost	$800,000
	Accumulated Depreciation	$320,000
	($800,000/5 x 2)
	Carrying Value on Jan. 1, 2018	$480,000
	Depreciation for 2018	$240,000
	($480,000 x 3/6)
19	$58,000
	Cost	$280,000
	Accumulated Depreciation	$76,000
	[($280,000 - $90,000)/5 years x 2]
	Carrying Value on Jan. 1, 2018	$204,000
	Depreciation for 2018	$58,000
	($204,000 - $30,000)/3 years