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1) Which of the following is not a requirement for an asset to be depreciable?a) It must have a life longer than 1 year.b) It must have a cost basis greater than $1000.c) It must be held with the intent to produce income.d) It must wear out or get used up.2) The concept similar to depreciation that is applied to natural resources is called what?a) Depletionb) Declining balancec) Amortizationd) MACRS3) A lumber company purchases and installs a wood chipper for $200000. The chipper is classified as MACRS 7-year property. Its useful life is 10 years. The estimated salvage value at the end of 10 years is $25000. If you are using MACRS which of the following is closest to the first-year depreciation?a) $17500b) $20000c) $25008d) $285804) Hunter Inc. just purchased an air compressor in December 2010 priced at $160000.Additional charges of $10000 were incurred for site preparation. The compressor isclassified as 5-year MACRS class property. Hunter is considering selling the compressor for $85000 in July 2011. Compute the book value that should be used in calculating the taxable gains.a) $108800b) $57600c) $102400d) $65280

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