Which of the following best describes an accelerated depreciation method? A. A method by which an equal amount of expense is assigned for every full year of use. B. A method by which depreciation is based on the level of actual usage rather than the passage of time. C. A method of determining depreciation which assigns larger expenses to the initial years of an asset’s service and smaller expenses to the later years. D. A method of allocating the cost of a wasting asset to expense over the periods during which the value is removed from the property.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Which of the following best describes an accelerated
A. A method by which an equal amount of expense is assigned for every full year of use.
B. A method by which depreciation is based on the level of actual usage rather than the passage of time.
C. A method of determining depreciation which assigns larger expenses to the initial years of an asset’s service and smaller expenses to the later years.
D. A method of allocating the cost of a wasting asset to expense over the periods during which the value is removed from the property.
Solution:
Depreciation is charged on fixed assets to accounts for its reduction in value due to normal wear and tear. There are various method of computing depreciation such as:
1. Straight line method
2. Units of production method
3. Sum of digit of years method
4. Double declining balance method
Step by step
Solved in 2 steps
