"Depreciation is provided to not only cover capital expenditure during the span ofAssets life, but also to accumulate required funds for the replacement of the PPE" Explain thisstatement. Also differentiate two popular method of depreciation with suitable figures.1."A systematic procedure has been adopted for the issue of Accounting Standard inIndia" Justify this statement.2. Bombay Okara Corporation Ltd. Purchased on 1" January 2015 from Delhi Motors fivetrucks costing Rs. 50,000 cach on the hire purchase system. The payment was to be made as:10% of cash price down and 25% of cash price at the end of four subsequent half years. Thepayment due on 31ª December 2015 could not be made and hence the trucks were by the4.vendor.But after negotiation, the hire purchaser was allowed to keep three trucks on the conditionthat the value of the other two trucks would be adjusted against the amount due, the truckbeing valued at cost less 25% depreciation. Bombay Corporation closed its books on 30 June

Since there are multiple parts in this question only the first part will be answered. The capital…

"Depreciation is provided to not only cover capital expenditure during the span of Assets life, but also to accumulate required funds for the replacement of the PPE" Explain this statement. Also differentiate two popular method of depreciation with suitable figures. 1.

"Depreciation is provided to not only cover capital expenditure during the span of Assets life, but also to accumulate required funds for the replacement of the PPE" Explain this statement. Also differentiate two popular method of depreciation with suitable figures. 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: practice, would you expect the depreciation expense for a non-current asset to be overestimated or…

A: Depreciation is charged for non current asset being tangible asset, because of its wearing and tear…

Q: 4. The most appropriate definition of depreciation is: A. A means of determining the decrease in the…

A: Introduction:- The following methods used to calculate depreciation as follows under:- Straight…

Q: Depreciation represents a __________ in the value of fixed assets.

A: Fixed assets are those type of assets which are being held by the business for longer period of…

Q: Depreciation is a process that involves: a. Increasing the value of assets b. Distributing the cost…

A: Depreciation reflects the gradual consumption, wear and tear, or obsolescence of the asset as it…

Q: GAAP provides guidelines for the inclusion of interest in the initial cost of a self-constructed…

A: 1.

Q: In calculating depreciation, both the long-lived asset's cost and useful life are based on…

A: Depreciation is a crucial aspect of accounting that reflects the allocation of an asset's cost over…

Q: Which of the following is excluded when projecting future cash flows for the purpose of determining…

A: As per International Accounting Standard 36 Impairment of assets When projecting future cash flows…

Q: Residual value is: A. Also called residual value. B. Also called scrap value. C. An estimate of the…

A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…

Q: What type of depreciation expense pattern is used under eachof the following methods and when is its…

A: or

Q: he straight-line meth

A: Depreciation refers to the systematic and gradual reduction in the value of a tangible asset over…

Q: Estimates of an asset's salvage value and usable life are used to determine depreciation costs. Is…

A: Different methods of depreciation are based on the useful life of the asset. However, one of the…

Q: Which of the following answers is the correct formula for determining the his Select one: O a.…

A: Historical cost of an asset: It is a sun of purchase price and any cost incurred to bring the asset…

Q: describe the costs associated with tangible and intangible assets, and the methods of expensing…

A: Tangible Assets: Intangible assets are tangible assets that can be touched or felt. They include…

Q: 1. Distinguish among depreciation, depletion and amortization. 2. Identify the factors that are…

A: Depreciation: It applies to tangible assets like buildings and machinery. It reflects the gradual…

Q: Which of the following depreciation methods will result in the most depreciation expense over the…

A: Depreciation is method to allocate the cost of the Assets over its useful life

Q: Compare and contrast amortization of intangible assets with depreciation and depletion.

Q: Depreciation techniques applicable to the most prevalent categories of depreciable assets might be…

A: This question explains about the most prevalent categories of depreciable assets might be…

Q: There are many terminologies used to describe the process of distributing the cost of an item over…

A: The Answer

Q: Depreciation Concepts Listed below are concepts and terminology related to depreciation. Required:…

A: Solution:- Matching the each concept with the related terminology as follows:-

Q: The depreciable amount is also called the _________________. Select one alternative: carrying…

A: Depreciable amount is the cost of an asset minus its residual value.

Q: Explain the similarities and differences among depreciation, depletion, and amortization. Provide…

A: The depreciation, depletion and amortisation are the various techniques used by company to record…

Q: Give examples of how depreciation, depletion, and amortization are all the same and how they're all…

A: This question says about depreciation, depletion, and amortization:

Q: Which of the following best describes depreciation? A.ccounts for the market value of a physical…

A: Depreciation is an expense which is shown and recorded in the expense side of the income statement.

Q: Evaluate the consequences of depreciation charged on the historical cost of the assets. I)…

A: Please see the next step for the solution

Q: Analyze the impact of depreciation methods (straight-line, declining balance, and units of…

A: Case Study: Tesla, Inc.BackgroundTesla, Inc., a prominent electric vehicle and clean energy company,…

Q: How to determine the percentage by which operating income can increase if the entire R&D expenditure…

A: Operating income is income of business from its normal operations Percentage Change = (New Value -…

Q: Define the following: (a) Depreciation (b) Book value

A: Asset refers to the resources kept by the businesses to be utilized in the operations. Assets are…

Q: When a number of low-cost depreciable assets with similar characteristics, service lives, and…

A: Group depreciation refers to that method of charging depreciation where the assets having similar…

Q: The key difference between amortization and depreciation is that amortization charges off the cost…

A: In this question, we are required to determine the key difference between depreciation and…

Q: The purpose of providing for depreciation in the statement of comprehensive income is to: O a.…

A: Depreciation refers to a decrease in value of asset over its useful life due to factors such as…

Q: Which one of the following disclousures is required by generally accepted accounting principle? a.…

A: The correct option is B. Balances of major classes of depreciable assets, by nature or function.

Q: Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market…

A: Depreciation expense is the systematic allocation of the cost of a long-term asset over its useful…

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: Describe the important properties of fixed assets?

A: Since you have posted a question with multiple questions, we will solve the first question for you.…

Q: In all cases, net property, plant and equipment (PP&E) should be calculated as the gross PP&E less…

A: Solution: Gross PP &E = Cost of purchase of PPE Accumulated depreciation = Depreciation…

Q: The methods for depreciating assets are 1) straight-line depreciation; 2) declining balance…

A: The selection of a depreciation method is critical for organizations since it has a direct influence…

Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

"Depreciation is provided to not only cover capital expenditure during the span of
Assets life, but also to accumulate required funds for the replacement of the PPE" Explain this
statement. Also differentiate two popular method of depreciation with suitable figures.
1.
"A systematic procedure has been adopted for the issue of Accounting Standard in
India" Justify this statement.
2.

Bombay Okara Corporation Ltd. Purchased on 1" January 2015 from Delhi Motors five
trucks costing Rs. 50,000 cach on the hire purchase system. The payment was to be made as:
10% of cash price down and 25% of cash price at the end of four subsequent half years. The
payment due on 31ª December 2015 could not be made and hence the trucks were by the
4.
vendor.
But after negotiation, the hire purchaser was allowed to keep three trucks on the condition
that the value of the other two trucks would be adjusted against the amount due, the truck
being valued at cost less 25% depreciation. Bombay Corporation closed its books on 30 June

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

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Audit procedures for items of Financial Statement

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

3) Which of the following best describes a depreciation base?7) The acquisition cost of an asset relative to its fair value O The estimated market value of an asset at the end of its useful life O The historical cost of an asset less the depreciation recognized to date O The amount that should be expensed over an asset's useful life
1. What are the three main factors used in determining depreciation of a fixed asset? 2. What is the double-declining balance method and what are the benefits of it?
What factors must be known or estimated in order to compute depreciation expense?
two different depreciation methods and prepare a chart showing the effects the depreciation method has on net income and total assets
In interest capitalization related to self constructed assets, all of the following must occur before the capitalization window begins except: A.Expenditures for the assets have been incurred B.Depreciation of the asset being built has been recognized C.Activities that are necessary to get the asset ready for its intended use are in progress D.Interest has to be incurred
what is the ultimate purpose of long-term assets? How should the cost of these assets be allocated over the asset's useful life? Why is depreciation not synonymous with valuation?
what is the important difference in the acquisition and payment of long-lived assets compared to those of current assets? Briefly explain.
Which of the following best describes depreciation?A It is a means of spreading the payment for the asset over its total estimated lifeB It represents the decline in the market value of the assetC It is a means of spreading the cost of an asset over its estimated useful lifeD It is a way of estimating the cash needed to replace the asset in the future
What is the effective life of an asset? a. The total period of ownership of the asset, including when it is not installed and ready for use.. b. The period prior to the asset being abandoned or scrapped. c. The period that the asset can be used for income-producing purposes. d. All of the above.
Explain the following terms: (a)Depreciation, (b)accumulated depreciation, (c)book value, (d)fixed asset, (e)intangible asset.
4. In full cost and successful efforts accounting, costs are amortized over either proved reserves (PR) or proved developed reserves (PDR). Fill in the following table to indicate which reserves (PR or PDR) should be used to amortize the costs under each accounting method. If the costs should not be amortized, put an X to indicate no amortization. Cost a. Proved property acquisition b. Unproved property acquisition c. Successful exploratory drilling d. Successful development drilling e. Unsuccessful exploratory drilling f. Unsuccessful development drilling g. G&G costs h. Wells-in-progress-proved property SE FC