EXERCISE 1. A copy machine cost $95,000 and has an estimated residual value of $5,000.

It is
e xpected to last about ten years and to make a total of 3,000,000 copies. 200,000 copies are
made in Year 1, 300,000 in Year 2, and 450,000 in Year 3. Units-of production depreciation
is used.

1) What is the depreciation expense in Year 1?

A) $6,400;
B) $6,000;
C) $9,000;
D) $9,500.

2) WHAT IS THE DEPRECIATION EXPENSE IN YEAR 2?

A) $9,500;
B) $6,000;
C) $9,600;
D) $9,000.

3) WHAT IS THE DEPRECIATION EXPENSE IN YEAR 3?

A) $9,000;
B) $14,400;
C) $13,500;
D) $9,500.

4) WHAT IS THE BALANCE IN THE ACCUMULATED DEPRECIATION ACCOUNT AT THE END OF

YEAR 3?

A) $27,000;
B) $30,400;
C) $18,000;
D) $28,500.

EXERCISE 2. An asset cost $15,000, has residual value of $1,500, and has an estimated useful
life of twenty years. What is the depreciation expense for the second year, using the straight-
line method?

A) $750;
B) $825;
C) $1,350;
D) $675.

EXERCISE 3. On July 1, 19X1, equipment is purchased for $9,000. It has an expected useful
life of nine years and no residual value. On January 1, 19X3, the company decides the
equipment will last five more years. What amount of depreciation expense should be
recorded on December 31, 19X3 if the straight-line method is used?
A) $1,500;
B) $1,800;
C) $1,400;
D) $1,000.