The most appropriate reason for an increase in depreciation expense is that a. Depreciation for prior periods was overstated. b. Major repairs were not recorded. c. A depreciable asset was impaired. d. Retained earnings have been appropriated for a possible loss on retirement. e. Based on a re-evaluation, estimated salvage values have been lowered

The most appropriate reason for an increase in depreciation expense is that a. Depreciation for prior periods was overstated. b. Major repairs were not recorded. c. A depreciable asset was impaired. d. Retained earnings have been appropriated for a possible loss on retirement. e. Based on a re-evaluation, estimated salvage values have been lowered

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 4CYBK

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Which of the following statements about depreciation is not true? A. Depreciation does not mirror the actual loss of value over time. B. Depreciation is the allocation of the asset’s cost to expense over the expected years of use. C. If the fair value of the asset increases, depreciation is reversed to reflect the change in value. D. U.S. GAAP requires depreciation methods to be systematic and rational.
Salvage value is not considered directly in the determination of the deprecation amount with the a.sum-of-the-years'-digits method. b.straight-line method. c.declining-balance method. d.units-of-production method.
Which of the following statements is true regarding depreciation methods?a. The use of a declining balance method of depreciation will produce lower depreciation charges in the early years of an asset’s life compared to the straight-line depreciation method.b. Over the life of an asset, a declining balance depreciation method will recognize more depreciation expense relative to the straight-line method.c. The use of a declining balance method instead of the straight-line method will produce higher book values for an asset in the early years of the asset’s life.d. The use of a higher estimated life and a higher residual value will lower the annual amount of depreciation expense recognized on the income statement
Depreciation of non-current assets is due to : I. wear and tear when the assets are used, II. physical deterioration of the assets, III. low market value after being used for several years. IV. judgement by the owner.
Which of the following is true regarding special issues in accounting for long-term assets?A. An asset’s useful life can never be changed.B. An asset’s salvage value can never be changed.C. Depreciation expense calculations may need to be updated using new and more accurate estimates.D. Asset values are never reduced in value due to physical deterioration.
Which combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired? C . Declining balance depreciation with a short useful life.
1)If an asset value recovers after an impairment loss has been recognized for the asset, what amount of restoration of that loss is recognized?a.The difference between the original cost and the new recoverable amount.b.The difference between the original loss and the new recoverable amount.c.The difference between the carrying amount and the new recoverable amount.d.None of the recovered value is recognized.2) Occasionally, events occur that change an asset's value after purchase. Which of the following is true regarding these changes in value?a.Increases in asset value are recognized.b.Reductions in asset value are recognized.c.Both decreases and increases are recognized.d.Neither decreases nor increases are recognized.
Which of the following depreciation methods initially ignores salvage value in its calculation? a.Declining-balanceb.Sum-of-the-years'-digitsc.Straight-lined.Units-of-production
Which combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired? B . Declining balance depreciation with a long useful life.
Which of the following statements about depreciation is false?: Depreciation does not apply to most buildings because their usefulness and revenue producing ability generally remain intact over time. Recording depreciation in each period is an application of the expense recognition (matching) principle. Depreciation is required because of wear-and-tear and technological obsolescence. The balance in accumulated depreciation represents the total cost that has been charged to expense since placing an asset in service.
What element must be present when determining if an asset is a depreciating asset? a. An asset that holds its value for a period of time or increases in value for a period. b. An asset that has a limited effective life. c. A fixture that completely loses its value. d. An asset that cannot reasonably be expected to decline in value over time.
Which of the following statements about MACRS is false?A. Depreciable assets are assumed to have no residual or salvage value.B. Every depreciable asset is assigned to one of ten recovery periods.C. Allowable depreciation methods are based on the assets assigned recovery period.D. None of the above is false. please explain without plagiarism