epletion is the process of allocating the cost of natural resources to periods when they are extracted true or fals
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depletion is the process of allocating the cost of natural resources to periods when they are extracted
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- What is the primary objective of depletion accounting in natural resource industries?Which of the following depreciation methods most closely approximates the method used to deplete the cost of natural resource? a. Straight-line method b. Double-declining-balance method c. Either the cost model or the revaluation model d. The recoverable amount modelThe write-off of the cost of plant and equipment is called a.amortization. b.depletion. c.depreciation. d.deterioration
- What is the systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life called (also thought of as the decline in usefulness of the fixed asset over time)? Group of answer choices fixing costing amortization depreciationTrue (t) or False (f) ______ The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.The depreciation method used shall reflect the pattern in which the asset’s future economic benefits areexpected to be consumed by the entity. Which statement is incorrect regarding depreciation methods?a. Straight-line depreciation results in a constant charge over the useful life if the asset’s residual value does not change.b. The diminishing balance method results in a decreasing charge over the useful lifec. The units of production method results in a charge based on the expected use or outputd. A depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is appropriate.
- Why are the costs of plant/long term assets recovered through depreciation vs. expensed out during the period purchased?Assume that the capital expenditures to replace and upgrade the production equipment areas given in the original exercise, but that the production and sales quantity is not known. Forwhat production and sales quantity would SS (i) upgrade the equipment or (ii) replace the equipment?What characteristics of a plant asset make it different from other assets? Why does GAAP require depreciation for certain plant assets? The balance in an Accumulated Depreciation - Equipment account does not represent funds to replace the equipment when it wears out; instead, what does it represent?
- 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 AnswersNextThe organization prefers using Written down value method for the depreciation of Machinery instead of Straight-Line Method. Explain why the written down value method is more appropriate than the straight-line method of depreciation?Explain why activity based method is more appropriate to calculate depreciation than straight line method
