Answered: Depreciation is a process of asset…

Depreciation is a process of asset valuation where an asset's book value (cost less accumulated depreciation) often approximates it fair value. Do you agree or disagree? Explain why or why not.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 4DQ

See similar textbooks

Related questions

Q: If a company buys an intangible asset, it can only utilize the revaluation model to evaluate the…

A: This question describe about the revaluation model to evaluate the asset's value later.

Q: 1)If an asset value recovers after an impairment loss has been recognized for the asset, what amount…

A: Since, you have posted more than one question, we will answer the first question for you. If you…

Q: The term that applies when an intangible asset is expensed over time rather than fully expensed at…

A: Any tangible fixed asset purchased has a fixed life throughout which it has to be used. Over the…

Q: Which of the following concepts is violated when measuring inventories at the lower of cost and net…

A: Solution: As per historical cost concept, in accounting value of an assets is recorded at original…

Q: The book value of an asset is equal to the asset's cost less accumulated depreciation.…

A: Book value means the value as per books of accounts. The assets are generally recorded at cost less…

Q: key characteristic for theclassification of an asset as ‘held for sale’ is that the carrying amount…

A: As per IFRS 5 a non-current asset or disposal group is classified as held for sale if its carrying…

Q: Which of the following concepts is not related to depreciation? Select one: a. Historical cost…

Q: Allowable depreciation reduces the basis of an asset whether the depreciation is deducted or not.

A: Allowable depreciation is the depreciation of the asset which is must allowed to deduct from the tax…

Q: The cost of an asset that is subject to depreciation is called a.depreciable cost. b.trade-in…

A: Depreciable cost is that portion of cost of asset which can be depreciated. Trade in value relates…

Q: "Depreciation is a valuation process that results in the reporting of the fair value of the asset.”…

A: Fixed assets: These are the assets which were used in the business for more than one year. These…

Q: What element must be present when determining if an asset is a depreciating asset? a. An asset…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. depreciating…

Q: Are litigation costs to defend an intangible asset capitalized or expensed? Explain your answer.

A: Litigation Costs should be capitalised and amortised over the remaining useful life of the related…

Q: When an impairment loss occurs, the carrying amount of the asset should be reduced to its a) ©…

A: Impairment: It implies to an increase in the fixed asset's carrying value in relation to the price…

Q: Why would refinancing be an alternative to sale of the property?

A: Individuals always buy the properties taking the mortgage because payment for buying the property…

Q: The following terms are mismatched with its definitions. Match the terms to its correct definitions.…

A: The terms are matched with the definitions in below table:

Q: When market value of an asset is higher than book value, depreciation is not charged. A) True B)…

A: Meaning of depression. Depreciation is a reduction in the value of asset due to wear and tear,…

Q: Depreciation is a process of cost allocation, not valuation. Explain this statement.

A: Depreciation: Depreciation expense is a non-cash expense, which is recorded on the income statement…

Q: Is residual value deductible when using accelerated method of depreciation>

A: The accelerated method of depreciation includes double declining balance method, 150% declining…

Q: Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its…

A: Impairment of an asset: Impairment is the loss that occurs due to, unexpected decrease in the market…

Q: There are much argument about using cost instead of fair value to record acquired assets. In your…

Q: What is the amount to be capitalized when repairs or improvements that significantly increase the…

A: Assets are being repaired every now and then. Some repairs are ordinary in nature while others are…

Q: Depreciation is a valuation process that results in the report-ing of the fair value of the asset.”…

A: Depreciation is a form of non-cash expenditure which represents the normal wear & tear and…

Q: If a company purchases a limited-life intangible asset, they _____________ amortize the asset and…

A: Intangible assets are those that are not monetary assets and cannot be touched or seen. These arise…

Q: The book value of an asset is defined as ____________________. a. Estimated fair market value b.…

A: Book Value of an asset is the measure of the historical cost of an asset decreased by the total…

Q: The book value of an asset is equal to thea. Replacement cost.b. Asset’s cost less accumulated…

A: Every asset has a limited period of life. With the continuous use of an asset in the course of…

Q: Which of the following best describes the higher of an asset's net selling price and its value in…

A: Asset's net selling price is the amount obtainable from the sale of assets less any disposal cost.…

Q: What is the treatment of any gain on a subsequent increase in the fair value less cost of disposal…

A: Subsequent will increase in truthful price. A gain for associated consequent increase in truthful…

Q: An entity that acquires an intangible asset may use the revaluation model for subsequent measurement…

A: Intangible assets are those which does not have physical substance. It includes copyright, goodwill,…

Q: hat situational circumstances can the Asset-based valuation be

A: Valuation is the process of determining the fair market value of a company's assets or operations.…

Q: Under IFRS, the costs of relocating property, plant, and equipment can be capitalized as assets and…

A: Cost of capitalization: When an asset is constructed or bought, there are two costs that would form…

Q: A loss on disposal

A: The loss on disposal arose when the asset is sold for less than the book value of the asset. The…

Q: Depreciation, depletion, and amortization deductions are not available for some types of property;…

A: Some assets' costs are not recovered because they do not qualify as trade assets, which is the…

Q: How should acquisition related costs such as due diligence and legal costs be accounted for?…

A: As per IFRS3, Acquisition costs such as Advisory cost, Accounting, and due diligence cost, Legal…

Q: Which statement about depreciation is false?a. A major objective of depreciation accounting is to…

A: Answer: Option b.

Q: A) What is residual value? Support your answer with an example ( word count 100)

A: Lets understand the basic. When person purchase the asset they expected that after the useful life…

Q: Explain why depreciation on an existing asset is always irrelevant.

A: Fixed assets are those assets that are being held by the business for a longer period of time. For…

Q: Which of the following statements about capitalizing costs is correct?A. Capitalizing costs refers…

A: There are two type of costs treatments that are being done on all type of costs being incurred. One…

Q: A gain on the disposal of an asset indicates that the asset was sold for more than Its fair value.…

A: Lets understand the basics. When there is sale happens of asset then there is profit or loss arise.…

Q: In a replacement analysis, the market value of the currently owned asset a. does not impact the cash…

A: With the passage of the time, old assets are outdated and more cost is incurred to maintain. So, it…

Q: If a newly acquired asset is ‘held for sale’, the asset or disposal group will be measured at: A.…

A: Held for sale assets are those assets that are acquired for the purpose of sale in short period of…

Q: Is Penny correct? Do the terms depreciation, depletion, and amortization all mean the same thing?

A: Amortization: It is the process of allocating the value of an intangible asset over its definite…

Q: One factor that is not considered in determining the useful life of an intangible asset is* Residual…

A: Hi Student Since there are multiple questions we will answer only first question. If you want…

Q: “Some asset valuations using historical costs are highly relevant and very representationally…

A: Some important qualities of accounting information are: Relevance Reliability

Q: Which of the following factors is NOT considered in determining the useful life of an intangible…

A: Intangible assets are assets that can not be seen or touched. Their effect can only be felt like…

Question

Depreciation is a process of asset valuation where an asset's book value (cost less accumulated depreciation) often approximates it fair value. Do you agree or disagree? Explain why or why not.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1- concepts

VIEW

Step 2- Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

In practice, would you expect the depreciation expense for a non-current asset to be overestimated or underestimated? Explain why this is the case.
Depreciation is a valuation process that results in the report-ing of the fair value of the asset.” Do you agree? Explain.
Some believe that accounting depreciation measures thedecline in the value of fixed assets. Do you agree? Explain.
Which of the following is INCORRECT regarding depreciation? Select one: O a. It is not a matter of valuation. O b. It is a means of cost allocation. Oc. O d. It is an attempt to reflect the fair market values of the related assets. It is part of the matching of revenues and expenses.
The following terms are mismatched with its definitions. Match the terms to its correct definitions. Terms Definitions Carrying amount The higher of an asset's fair value less costs to sell and its value in use Cost The cost of an asset or other amount substituted for cost, less its residual value Depreciable amount The amount by which the carrying amount of an asset exceeds its recoverable amount Entity-specific value The amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses Fair value The amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction Recoverable amount The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date Residual value The present value of the cash flows an entity expects to arise from the…
What do you mean when you say the depreciable life of an asset is defined?
Allowable depreciation reduces the basis of an asset whether the depreciation is deducted or not. Group of answer choices True False
The key difference between amortization and depreciation is that amortization charges off the cost of an intangible asset, while depreciation does so for a tangible asset. True False
Explain why depreciation on an existing asset is always irrelevant.
What are depreciation and its purpose? Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Why or why not? Should the financial statements reflect the value of fixed assets? Why or why not?
Which asset never depreciates in value?
Which of the following is NOT a way to dispose of an asset? a.Sell it.b.Exchange it for another asset.c.Discard or scrap it.d.All of these are ways to dispose of an asset.