Which of the following events is most appropriately recorded as reduction to accumulated depreciation? a. An addition that increases the anticipated benefits of the old asset b. An improvement that extends an asset's useful life c. An improvement that increases the asset's expected benefits beyond that originally expected d. A replacement of a better asset for the one currently used

Which of the following events is most appropriately recorded as reduction to accumulated depreciation? a. An addition that increases the anticipated benefits of the old asset b. An improvement that extends an asset's useful life c. An improvement that increases the asset's expected benefits beyond that originally expected d. A replacement of a better asset for the one currently used

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 4DQ

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Statement 1: If there is an indication of impairment, it means that the remaining useful life, the depreciation/amortization method or the residual value for the asset needs to be reviewed and adjusted, even if no impairment loss is recognized for the asset. Statement 2: Replacement costs are generally appropriate in measuring the recoverable amount of the asset because replacement cost not only measures the cost of an asset but also measure the future economic benefits recoverable from its use and/or disposal. O Only Statement 1 is correct. O Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.
Which of the following statements if not true? a. Depreciation is the process of allocating the purchase price of an asset minues its residual value to expense, for each period benefited by the asset. b. The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset. c. The service life of an asset is the measure of the number of years of service expected from the asset before its disposal. d. The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the cost of disposal.
Salvage value is: O Also called residual value Also called scrap value O An estimate of the asset's value at the end of its benefit period O A factor relevant to determining depreciation O All of the above
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
What element must be present when determining if an asset is a depreciating asset? a. An asset that holds its value for a period of time or increases in value for a period. b. An asset that has a limited effective life. c. A fixture that completely loses its value. d. An asset that cannot reasonably be expected to decline in value over time.
A) What is residual value? Support your answer with an example ( word count 100) B) In practise, would you expect the depreciation expense for a non-current asset to be overestimated or underestimated? Explain why this is the case.
1. Depreciation is best described as a method of a. Asset valuation b. Current value allocation Cost allocation C. d. Useful life determination 2. All of the following factors are considered in determining the useful life of an asset, except a. Expected usage of the asset b. Expected physical wear and tear c. Technical obsolescence d. Residual value 3. Technical or commercial obsolescence arises from a. Expected usage of the asset b. c. Expected physical wear and tear Change or improvement in production or change in the market demand for the product output of the asset d. Expiry date of related lease of the asset 4. The production method of depreciation results in a. Constant charge over the useful life of the asset. b. Decreasing charge over the useful life of the asset. c. Increasing charge over the useful life of the asset. d. Variable charge based on the expected use or output of the asset. 5. What factor must be present under the production method of depreciation? a. Total units…
Residual value is: A. Also called residual value.B. Also called scrap value.C. An estimate of the asset's value at the end of its benefit period.D. A factor relevant to determining depreciation.E. All of these.
In calculating depreciation, both the long-lived asset's cost and useful life are based on estimates. Select one: O True O False
Which of the following answers is the correct formula for determining the historical cost of an asset? Select one: O a. historical cost = original value of the asset - accumulated depreciation. O b. historical cost = the basic purchase price of the asset minus any other costs necessary to prepare the asset ready for use. O c. historical cost = the basic purchase price of the asset plus any other costs necessary to prepare the asset ready for use. O d. historical cost = the basic purchase price of the asset only.
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
When a number of low-cost depreciable assets with similar characteristics, service lives, and residual values is required, which depreciation method should be used? a. Compsite depreciation b. Replacement depreciation c. Group depreciation d. Retirement depreciation