General accounting Question 4 points 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

Explanation of Depreciation: Depreciation is the systematic allocation of an asset's cost over its…

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

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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
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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
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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.

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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