Select correct answer Which circumstances warrant modificationsto standard depreciation methods?a) Straight-line methods must always applyb) Unusual asset usage patterns justifydifferent allocation approachesc) Tax rules dictate all choicesd)Managementeconomic realitypreferencesoverride

Depreciation methods are used in practice to spread the cost of an asset over the useful economic…

Answered: Which circumstances warrant…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 2MC

See similar textbooks

Similar questions

Match 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 method
Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNext
Which valuation method is dependent on a calculation of terminal value? a) DCF b) Comparable Property c) Capitalization Rate d) Replacement Cost Please ensure accuracy and explain your choice
Explain what is meant by an accelerated depreciationmethod. Are accelerated methods more widely used infinancial statements or in income tax returns? Explain.
Why is depreciation added to Net CAPEX? A To adjust CAPEX for taxable income B To isolate changes due to buying or selling of CAPEX с To reflect the economic value of the fixed assets
Which of the following is not a factor in selecting a depreciation method? a. salvage valueb. repair and maintenance costsc. Inflationd. the risk associated with the cash flows from the asset
The modified internal rate of return (MRR) test is designed to address a limitation associated withthe use of the internal rate of return (IRR). What is that limitation?a) Working capital requirementb) Income taxesc) Reinvestment rated) Depreciation expense
General accounting
From the following identify the cost that is not a cost of PPE? Professional fees Nonrefundable taxes Testing the functionality of asset Value added tax Jumn to
What is the purpose of charging depreciation in financial statements? A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use B To ensure that funds are available for the eventual replacement of the asset C To reduce the cost of the asset in the statement of financial position to its estimated market value D To account for the ‘wearing-out’ of the asset over its life
Select all that are true with respect to depreciation. Group of answer choices Depreciation is a cash flow outflow at the time it is recorded in the financial statements Depreciation itself is not a cash flow Accounting depreciation impacts cash flow, Tax depreciation does not Accounting depreciation does not impact cash flow, Tax depreciation does impact cash flow The depreciation tax shield is a relevant cash flow for decision making
a) Describe the circumstances in which the revaluation model may be used inrelation to non-current assets and critically evaluate its usefulness comparedto the historic cost model.

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS

Which circumstances warrant modifications to standard depreciation methods? a) Straight-line methods must always apply b) Unusual asset usage patterns justify different allocation approaches c) Tax rules dictate all choices d) Management economic reality preferences override