In the sum of the years-digits method, the fraction 4/10, the numerator 4 is called as ________. a. Cost b. Residual value c. Sum of the assets service life d. Years remaining
In the sum of the years-digits method, the fraction 4/10, the numerator 4 is called as ________. a. Cost b. Residual value c. Sum of the assets service life d. Years remaining
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 80E: Asset Efficiency Ratios Refer to financial statements in Exercise 12-76 and the information below....
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Question
In the sum of the years-digits method, the fraction 4/10, the numerator 4 is called as ________.
a.
Cost
b.
Residual value
c.
Sum of the assets service life
d.
Years remaining
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