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The cost of fixed assets is distributed over the asset's estimated lifetime. This spreading of costs over the periods which receives benefit is known as
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- What refers to the present worth of cost associated with an asset for an infinite period of time? Select one: a. payback period b. capitalized cost c. incremental cost d. operating costThe estimated economic life of an asset is also known as ________. A. residual value B. book value C. salvage life D. useful lifeWhat is the systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life called (also thought of as the decline in usefulness of the fixed asset over time)? Group of answer choices fixing costing amortization depreciation
- Chapter 8 Why are the costs of plant/long term assets recovered through depreciation vs. expensed out during the period purchased? Choose one of the following depreciation methods to discuss: straight line, units of production, declining balance. Share how depreciation using this method is calculated and provide an example of when this would be the most ideal method for application.Blueprint Connection: Depreciation Methods Depreciation is the process of allocating the cost of an asset to expense over the asset's estimated useful life. The amount depreciated is the cost of the asset less the asset's expected residual value. An accelerated depreciation method allocates larger amounts of depreciation expense to earlier periods of an asset’s life and smaller amounts of depreciation expense to later periods of an asset’s life. Straight-line depreciation allocates an equal amount of the asset’s cost to depreciation expense for each year of the asset’s useful life. Units-of-production depreciation is used primarily to depreciate machinery and allocates costs based on the actual use of the machine to produce product. While these methods allocate a different amount of depreciation expense to each year of an asset’s life, the total amount of depreciation expense recognized over the asset’s life is the same under either method. Select the depreciation method…The life cycle costs of an asset include which of the following? I. Purchase cost of the asset II. Shipping and installation cost of the asset. III. Operating and maintenance cost of the asset IV. Salvage value of the asset. Solve, a. I and IV only b. I, III, and IV only c. I and III only d. I, II, III, and IV.
- Which of the following amortization methods is most likely to evenly distribute the cost ofan intangible asset over its useful life?A. Straight-line methodB. Units-of-production methodC. Double-declining balance methodAn estimate of how an asset will be used up over its useful life is known as what? a. Depreciation rate b. Impairment value c. Useful life d. Salvage valueThe total cost of an asset less its accumulated depreciation is called: Multiple Choice Historical cost. Book value. Present value. Current (market) value. Replacement cost.
- Which depreciation method will compute the most depreciation expense over the life of the asset? O Declining-balance will produce the most depreciation expense. O Units-of-production will produce the most depreciation expense. O All methods will produce equal depreciation expense over the life of the asset. O Straight-line will produce the most depreciation expenseWhich of the following statements if not true? a. Depreciation is the process of allocating the purchase price of an asset minues its residual value to expense, for each period benefited by the asset. b. The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset. c. The service life of an asset is the measure of the number of years of service expected from the asset before its disposal. d. The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the cost of disposal.(Multiple Choice Question) Amortizable Cost refers to 1. An asset's Net Book Value minus its Accumulated Amortization 2. The added cost of a capital asset after undergoing a capital improvement 3. The portion of the cost of the asset that will amortize over its useful life 4. The entire cost of a capital asset