1. Is it necessary for a business to use the same method of computing depreciation for all classes of its depreciable assets? 2. Under what conditions is the use of the straight-line depreciation method most appropriate? 3. Under what condítions is the use of the units-of-activity depreciation method most appropriate? 4. Under what conditions is the use of the double- declining-balance depreciation method most appropriate?

1. Is it necessary for a business to use the same method of computing depreciation for all classes of its depreciable assets? 2. Under what conditions is the use of the straight-line depreciation method most appropriate? 3. Under what condítions is the use of the units-of-activity depreciation method most appropriate? 4. Under what conditions is the use of the double- declining-balance depreciation method most appropriate?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 12DQ

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12. How is the matching principle related to the recording of depreciation on tangible operational assets? A. The matching principle requires a company to use the same depreciation. B. Once a particular depreciation method is adopted for a particular asset, the owner must continue to use the same method. C. The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset. D. A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue.
One of the main differences between U.S. GAAP and IAS/IFRS is the measurement of property, plant & equipment subsequent to initial recognition. Read IAS 16 and answer the following questions. Provide a list of the references you have used to search this topic. 1) What are the accounting models accepted under IFRS for the measurement of property, plant & equipment subsequent to initial recognition? 2) How often should the company revalue its property, plant & equipment under the revaluation model? 3) How should the revaluation gains and losses be accounted for and reported in the financial statements? 4) How should any claim for compensation from third parties for impairment be accounted for? 5) How should the recoverability of the carrying amount of property, plant & equipment be accounted for?
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.
What method does a company use to depreciate its property and equipment? A. Activity-based method B. Double-declining-balance method C. Straight-line method
15 - Which of the following statements about depreciation is false? a) Depreciation is a type of expense that does not require a cash outflow. B) As a result of use, wear, tear, depreciation or obsolescence must be experienced in the tangible asset. NS) The asset to be depreciated should be among the assets of the enterprise. D) Proportional depreciation method can be applied for all tangible fixed assets. TO) For a property, plant and equipment to be depreciated, its economic life must be more than one year.
4. The most appropriate definition of depreciation is: A. A means of determining the decrease in the market value of an asset over time B. A means of allocating the cost of an asset over a number of accounting periods C. A means of setting funds aside for the replacement of the asset D. A means of estimating the current value of the asset
The methods for depreciating assets are 1) straight-line depreciation; 2) declining balance depreciation (specifically double declining balance); and 3) units-of-production or units-of-activity or activity based depreciation. Is it possible that I can recieve help with descibing each method and comparing the different depreciation methods and its effect on net operating income?
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.
Why would a company choose to depreciate one piece of equipment using the double-declining-balance method and another piece of equipment using straightline depreciation?
1. Distinguish among depreciation, depletion and amortization. 2. Identify the factors that are relevant in determining the annual depreciation charge and explain whether these factors are determined objectively or whether they are based on judgment. 3. For what reasons are plant assets retired? Define inadequacy, supersession, and obsolescence. 4. What are the major factors considered in determining what depreciation method use? 5. List the similarities and the differences in accounting treatments of depreciation and cost depletion.
Which of the following statements relating to the Accumulated Depreciation account is correct? Select one: O a. The normal balance of the Accumulated Depreciation account is a debit balance. O b. The Accumulated Depreciation account allows the accountant to determine the precise market value of the related asset. O c. The Accumulated Depreciation account is classified as a Liability account. O d. The balance in Accumulated Depreciation account reflects the portion of the historical cost of the asset that has become expense since the item was purchased.
Which one of the following disclousures is required by generally accepted accounting principle? a. Depreciation expense for each major class of asset b. Balances of major classes of depreciable assets, by nature or function c. Accumulated depreciation on each depreciable asset d. An explanation of why the depreciation method used was selected by management