1. For what reasons are plant assets retired? Define inadequacy, supersession, and obsolescence.
2. What basic questions must be answered before the amount of the depreciation charge can be computed?
3. Workman Company purchased a machine on January 2, 2012, for $800,000. The machine has an estimated useful life of 5 years and a salvage value of $100,000. Depreciation was computed by the 150% declining-balance method. What is the amount of accumulated depreciation at the end of December 31, 2013?
4. Silverman Company purchased machinery for $162,000 on January 1, 2012. It is estimated that the machinery will have a useful life of 20 years, salvage value of $15,000, production of 84,000 units, and working hours of 42,000. During 2012, the company uses the machinery for 14,300 hours, and the machinery produces 20,000 units. Compute depreciation under the straight-line, units-of-output, working hours, sum-of-the-years’-digits, and doubledeclining- balance methods.
5. What are the major factors considered in determining what depreciation method to use?