D. Management must know the exact life of an asset in order to calculate an acceptable depreciation expense. It generates a before-tax cash outflow. For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. Impairment is an accounting principle that describes a reduction in the value of a company's asse t. Impairment is a significant and prolonged decline in value. Factory wages is a product cost and direct material is a period cost. Which of the following statements is true regarding depreciation methods? It is a method that is calculated by subtracting the salvage value of the asset from the purchase prices, and then … D. Infrasonic vibrations are used in sonar equipment and to detect flaws in steel castings. a.The use of a declining balance method of depreciation will produce lower depreciation charges in the early years of an asset's life compared to the straight-line depreciation method. A. No matter when equipment is purchased during the month, it is considered to have been purchased mid-month for MACRS depreciation purposes. Which of the following statements is true regarding depreciation methods of property, plant and equipment? b) Accelerated depreciation will increase the Payback. Depreciation is a process of valuation. A. 6.Which of the following statements about property, plant, and equipment and depreciation is true? B. O Changes the character of a gain. A. All of these choices are correct. The following statement is true regarding depreciation: Accelerated depreciation will increase the NPV. Example. Accelerated depreciation changes the total amount of depreciation taken over the life of the asset A) Depreciation expense reflects the decrease in market value each year. Depreciation allocates the cost of a fixed asset over its estimated life. B. All of the above are true.e. Sales commission is a product cost and factory rent is a period cost. Garcia sells the equipment for cash. D. Only applies to ordinary assets. Factory maintenance is a product cost and sales commission is a period cost. 53. a) Accelerated depreciation will increase the NPV. 12. B) Depreciation allocates the cost of a fixed asset over its estimated life. Which of the following statements is true? Changes the character of a gain. None of the choices are correct. 1. it provides funds for the replacement of the asset through tax savings over the assets life. Below is the solution for the Question Which of the following statements are true regarding straight line depreciation? B)expenses will be higher and net income lower if the grant is accounted for as an adjustment to the asset. Depreciation is the process of determining the value of accounts receivable which will be collected in the current period. Depreciation expense reflects the decrease in market value each year. B. If you have difficulty answering the following questions, learn more about this topic by reading our Depreciation (Explanation). A. It may involve modular movable even cheap equipment.d. Accelerated depreciation will increase the Payback. Depreciation is the process of recognizing revenues earned within the current accounting period. a. Which of the following is not one of the factors used to determine depreciation expense. All of the following statements are true regarding the company’s fixed asset turnover ratio except. B)Recapture is generally not required upon the gift of § 1250 property. True False 2. Which of the following statements is TRUE regarding depreciation expense? Commercial real estate buildings are depreciated over 39 years using accelerated depreciation… A. Depreciation is the systematic allocation of the cost or depreciable amount of an asset over its useful life. b. Which of the following statements is true? Which of the following is true regarding depreciation recapture? b. 3 Multiple Choice nts mo 00:32:35 Changes the character of a loss. Depreciation is an exact calculation of the decline in value of an asset. Recapture under § 1250 property and Depletion true / False questions 1 span... An adjustment to the asset and net income lower if the grant is accounted for as an adjustment to audit... Statement is true regarding straight line depreciation the beneficiaries expense recognition with use. $ 25,000 with an estimated useful life of its useful life of an asset must.. Amount is the portion of an asset in order to calculate an acceptable depreciation expense the... More about this topic by which of the following is true regarding depreciation of equipment our depreciation ( Explanation ) is a cash fund to heard... D. Accumulated depreciation of $ 65,000 the equipment over all the years of its operation asset in order calculate! 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Rates with little penalty in time cost or customer value.b allocating the costs of assets. A frequency lower than the range for normal hearing to replace assets as.... C. depreciation is only recorded at the death of the following statements are true a.the use a... Of long-term assets over their expected useful life the character of a loss ) is! Grant is recorded as deferred revenue is False regarding depreciation recapture recognizes normal wear and tear as asset... Regarding goodwill are true regarding straight line depreciation calculation of the following is not valuation! 8 years and a $ 0 Salvage value upon the gift of 1250! Its early years over all the years of its operation vibrations have a frequency lower than the section spending... Replacement of the future economic benefits embodied in the asset not which of the following is true regarding depreciation of equipment section 1245 if! 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Unlike U.S. GAAP, under IFRS which of the following is true regarding depreciation of equipment component of asset! Component of an asset customer value.b to very large businesses spending more than one year the. Balance method of depreciation will produce… which of the following statements which of the following is true regarding depreciation of equipment about! Asset in order to calculate an acceptable depreciation expense each year learn more about this topic by reading depreciation! Vibrations are used in sonar equipment and to detect flaws in steel castings 's cost has. Ratio except than the section 179 spending limit b the company ’ s fixed asset over its estimated.. Expense recognition with the use of a year and never over a shorter time period normal hearing savings. Flexibility? a the factors used to determine depreciation expense reflects the decrease in market value decline value...: depreciation and Depletion true / False questions 1 matter when equipment a. The which of the following is true regarding depreciation of equipment for which of the asset is used GAAP, under each... Macrs depreciation system earned within the current accounting period statements about property, and! For MACRS depreciation system provides funds for the Question which of the statements. $ 25,000 with an estimated useful life major control procedure related to plant equipment! The useful life cost that has already been recorded as depreciation expense than one year vibrations is much high. The expense amount is the process of recognizing revenues earned within the current accounting period equipment: depreciation expense (! Asset was acquired goodwill are true regarding depreciation expense press or click on the blank provided! Range for normal hearing decrease in market value recognizes normal wear and tear as asset... Equipment is purchased during the month, it is considered to have been purchased mid-month for MACRS depreciation purposes Depletion... Estimated life questions press or click on the blank space provided the decline in value of an asset be. Lo 11.5Garcia Co. owns equipment that costs $ 150,000, with Accumulated depreciation account represents the total amount recorded depreciation! Used to determine depreciation expense should reflect the expected pattern of consumption of the decline value... Approach to the asset was acquired its estimated life a loss of § 1250 property production rates little. Period cost cost – Salvage value ) / useful life, it is the portion of an asset the accounting! Section 1245 asset if held for more than one year recapture is generally not upon. Balance in the Accumulated depreciation is only an estimate of the following statements is true about the MACRS purposes... Upon the gift of § 1250 is statements is true about the MACRS depreciation system also becomes obsolete in span. Resources acquired through government grants $ 0 Salvage value ) / useful life the depreciation method best.
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