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- Why would a company use accelerated depreciation instead of straight-line depreciation?Why do most of the firms select straight-line depreciation for book depreciation?What is the difference between depreciation expense and accumulated depreciation? What two items surprised you that a company is allowed to capitalize? What do you know as reasons a company may choose one deprecation method over another?
- What is depreciation? Why are depreciation methods important in the business arena? Explain the differences among the depreciation methods covered in chapter 10. Based on your evaluation, what is the best method of depreciation and why? What is the least used and Why?Why would companies choose one method of accounting for Depreciation over another method? What are the benefits of each depreciation type?Many companies use an accelerated depreciation method because: A. It is required by the tax code.B. It is required by financial reporting rules.C. It yields larger depreciation expense in the early years of an asset's life.D. It yields a higher income in the early years of the asset's useful life.E. The results are identical to straight-line depreciation.
- Companies usually depreciate assets such as buildings even though those assets may be increasing in value. Why?Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.Why would a company choose to depreciate one piece of equipment using the double-declining-balance method and another piece of equipment using straightline depreciation?
- Jordan’s response about the impact of the diff erent depreciation methods on net profitmargin is most likely incorrect with respect to:A. accelerated depreciation.B. straight-line depreciation.C. units-of-production depreciation.1. Management of a company wants to inappropriately lower depreciation expense. Assume they are using the straight-line method. Which of the following would lower the company's depreciation expense? a. Increasing the useful life b. Decreasing the useful life C. Decreasing the salvage valueWhich of the following statements about depreciation is not true? A. Depreciation does not mirror the actual loss of value over time. B. Depreciation is the allocation of the asset’s cost to expense over the expected years of use. C. If the fair value of the asset increases, depreciation is reversed to reflect the change in value. D. U.S. GAAP requires depreciation methods to be systematic and rational.