FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Which of the following statements is true when comparing double declining balance depreciation to straight-line depreciation? a. Double declining balance deductions will be greater than straight-lin e deductions in all years of the asset’s
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- In subsequent years: Assuming that the asset is depreciable, the absence of depreciation charges in future years will increase the reported profit of those years so that the company's total profits over the entire useful life of the asset will in fact be unaffected by the error. Is that correct?arrow_forwardThe depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an): Multiple Choice Accelerated depreciation method. Book value depreciation method. Straight-line depreciation method. Units-of-production depreciation method. Unrealized depreciation method.arrow_forwardi need the answer quicklyarrow_forward
- When a number of low-cost depreciable assets with similar characteristics, service lives, and residual values is required, which depreciation method should be used? a. Compsite depreciation b. Replacement depreciation c. Group depreciation d. Retirement depreciationarrow_forwardMatch the concept that closely describes a particular depreciation method. Choose the correct answer lowers the tax liability a) double-declining balance method b) units-of-production method c) straight-line method more closely matches the expense with the benefit of the asset a) double-declining balance method b) units-of-production method c) straight-line method most commonly used method a) double-declining balance method b) units-of-production method c) straight-line methodarrow_forwardWhich of the following statements is FALSE? ◇ If an improvement or replacement is made and the carrying value of the asset that is removed is not known and the assets useful life is extended, accumulated depreciation should be debited for the cost of the improvement/replacement. O If the orginial cost of an installation is not known, and the rearrangement/reinstallataion cost is material in amount and benefits future periods, the cost should be capitalized as an asset A major repair should be treated as an addition, improvement or replacement. All of the above are trucarrow_forward
- Salvage value is: O Also called residual value Also called scrap value O An estimate of the asset's value at the end of its benefit period O A factor relevant to determining depreciation O All of the abovearrow_forwardThe use of accelerated depreciation for tax purposes and straight-line depreciation for accounting purposes results in: O The asset being fully depreciated for tax purposes in half the time it takes to become fully depreciated for accounting purposes. O A larger amount of depreciation expense shown on the tax return than on the income statement over the asset's useful life. O A larger amount of depreciation expense shown on the income statement than on the tax return in the last year of the asset's useful life. O A loss on the sale of the asset in question if it is sold for its book value before its useful life expires.arrow_forwardWhich of the following is a false statement about depreciation? It has no impact on cash It represents the physical deterioration of an asset It exists because of the matching principle Accelerated methods of calculating depreciation are acceptable under GAAParrow_forward
- Which statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.arrow_forward2. Which of the following depreciation methods usually results in the paying of the lowest income taxes in the early years of an asset’s life a. Sum-of the year’s digits depreciation method b. Double-declining balance (200%) depreciation method c. Straight-line depreciation method d. Units-of-production depreciation method Please do not plagiarisearrow_forwardWhen using the revaluation model of accounting for PP&E assets (asset-adjustment or elimination method), a new depreciation rate must be calculated. depreciation continues to be charged in the original pattern. the related Accumulated Depreciation account is closed to OCI. the difference between fair value and book value is always debited to Revaluation Surplus (OCI).arrow_forward
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