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declining-balance method of depreciation

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter7: Fixed Assets, Natural Resources, And Intangible Assets

Section: Chapter Questions

Problem 7.2.1MBA

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Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

The declining-balance method of depreciation procedure has:

a. a declining percentage rate each period

b. an increasing depreciation expense each period

c. a decreasing expense each period

d. a constant amount of depreciation expense each period

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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If an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it? A. accrual B. deferral C. estimate D. cull
When Accumulated depreciation account is credited with the amount of depreciation a. The cost of Fixed asset increases b. The cost of Fixed asset remains the same c. The cost of Fixed asset decreases d. The depreciation account decreases
Accumulated depreciation is record on the balance sheet as ___? A. A reduction in corresponding liability B. A reduction to the corresponding asset C. An increase in the corresponding liability D. An increase in the corresponding asset
Dividing accumulated depreciation by annual straight - line depreciation expense is best interpreted as an estimate of the: a) average life of a firm's assets. b) remaining life of a firm's assets. c) average age of a firm's assets.
Contrast the effects of the straight-line, declining-balance, and activity-based methods on annual depreciation expense.
The time an asset is expected to last is called its a.fiscal period. b.depreciation. c.useful life. d.net loss value.
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For financial accounting purposes, depreciation expense represents the decreasein an asset's fair market value. Select one: True False The total amount of depreciation taken over the life of a depreciable asset should be less if the double-declining balance depreciation method is used than if the straight-line method is used. Select one: True False
The depreciation expense is generally estimated based on some assumption such as percentage of sales or from a depreciation schedule. True False
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Characteristics of Depreciation Methods Below is a common list of depreciation methods and characteristics related to depreciation. Depreciation Methods a. Straight-line depreciation method b. Declining balance depreciation method c. Units-of-production depreciation method when actual units produced increases over the life of the asset Characteristics 1. Results in depreciation expense that decreases over the life of the asset. 2. Results in depreciation expense that increases over the life of the asset. 3. Allocates the same amount of cost to each period of a depreciable assets life. 4. Calculated by multiplying a constant depreciation rate by depreciable cost. 5. Calculated by applying a constant depreciation rate to the assets book value at the beginning of the period. 6. Results in lowest income taxes in early years of the assets life. 7. Consistent with the matching principle. Required: Match one or more of the depreciation methods with each characteristic.
An accelerated depreciation method that takes more expense in the first few years of the assets life is ________. A. units-of-production depreciation B. double-declining-balance depreciation C. accumulated depreciation D. straight-line depreciation