True or false ________ 10. Depreciation is charged on all company’s assets. ________ 11. Depreciation is the part of the cost of the fixed asset consumed during the period of use by the firm. ________ 12. The cost of repairs is included in the calculation of depreciation of a fixed asset
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- True or False _____ PAS 16 defines depreciation as "the decrease in the value of an asset." ______ According to PAS 16, items of PPE are initially measured at cost and subsequently measured using either the cost model or the fair value model. _______ an entity acquires an asset for P120k. The asset is estimated to have a useful life of 10 years and a residual value P20K. tHE STRAIGHT LINE DEPRECIATION RATE BASED ON DEPRECIABE AMOUNT IS 10% _______ An entity acquires an asset for P1M. A P200k residual value is estimated for the asset. Ar the end of the asset's useful life, the accumulated depreciation wil be equal to P1M. _______ A machine acquired on the 20th of Julyv(and ready for its intended use as at this date) would most likely be depreciated starting on the 1st of August. _______ A change in the depreciation method, useful life or residual value of a PPE is accounted for retrospectively.24. Depreciation Concepts Listed below are concepts and terminology related to depreciation. Required: Match each concept with the related terminology. 1. The period of time over which the company anticipates deriving benefit from the use of the asset 2. The cost of the asset minus its accumulated depreciation 3. The total amount of depreciation expense that has been recorded for an asset since the asset was acquired 4. The amount of cash or trade-in consideration that the company expects to receive when an asset is retired from service 5. A process of cost allocation, not an attempt to measure the fair value of an asset Terminology: depreciation accumulated depreciation book value estimated useful life residual valuewhich of the following statements is not correct? 1) generally accepted accounting principles require that the original cost of a long-term asset continue to appear in the asset account until the disposition of the asset. 2)The book value of a long-term asset is reduced each year as depreciation is recorded Building and trucks are examples of long -term assets 3)Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.
- A fixed asset with a cost of $32,167.00 and accumulated depreciation of $28,950.30 is sold for $5,468.39. What is the amount of the gain or loss on disposal of the fixed asset? Select the correct answer. A. $2,251.69 loss B. $2,251.69 gain C. $3,216.70 gain D. $3,216.70 lossA fixed asset with a cost of $31,304 and accumulated depreciation of $28,173.60 is sold for $5,321.68. What is the amount of the gain or loss on disposal of the fixed asset?9-An assets is classified as a fixed asset when ______________ a. It is bought for long term for resale in future b. It is used in the normal business operations and has life more than one year c. It has life less than one year d. It is one which has to be depreciated every year
- As you have seen in Chapter 17, companies depreciate, or write off, the expense of tangible assets such as trucks and equipment over a period of their useful lives. Many companies also have intangible assets that must be accounted for as an expense over a period of time. Intangible assets are resources that benefit the company but do not have any physical substance. Some examples are copyrights, franchises, patents, trademarks, and leases. In accounting, intangible assets are written off in a procedure known as asset amortization. This is much like straight-line depreciation, but there is no salvage value. Suppose you are the accountant for a certain pharmaceutical company. In January 2000, the company purchased the patent rights for a new medication from Novae, Inc., for $18,000,000. The patent had 15 years remaining as its useful life. In January 2005, your pharmaceutical company successfully defended its right to the patent in a lawsuit that cost $630,000 in legal fees. (a) Using…15 - Which of the following statements about depreciation is false? a) Depreciation is a type of expense that does not require a cash outflow. B) As a result of use, wear, tear, depreciation or obsolescence must be experienced in the tangible asset. NS) The asset to be depreciated should be among the assets of the enterprise. D) Proportional depreciation method can be applied for all tangible fixed assets. TO) For a property, plant and equipment to be depreciated, its economic life must be more than one year.Portland Co. uses the straight-line depreciation method for depreciable assets. All assets are depreciated individually except manufacturing machinery, which is depreciated by the composite method. Required: 1. What factors should have influenced Portland’s selection of the straight-line depreciation method? 2. a. What benefits should derive from using the composite method rather than the individual basis for manufacturing machinery? b. How should Portland have calculated the manufacturing machinery’s annual depreciation in its first year of operation?
- A fixed asset with a cost of $30,192 and accumulated depreciation of $27,172.80 is sold for $5,132.64. What is the amount of the gain or loss on disposal of the fixed asset? a.$2,113.44 loss b.$3,019.20 gain c.$3,019.20 loss d.$2,113.44 gainPROBLEM 3 (No. 6 and 7 are based on the following problem) Panganiban Company acquired an equipment on January 1, 2023, costing the company P1,500,000. It was at revalued amount less any accumulated depreciation and accumulated impairment losses and transfers a portion of its revaluation surplus as the asset is used every period On December 31, 2023, the fair value of the asset was P1,687,500 and the company appropriately recorded its revaluation surplus. On December 31, 2025, the recoverable amount of the asset was determined to be P1,010,625 On December 31, 2026, the fair value of the asset was determined to be P1,095,000 5. What amount of revaluation surplus should be credited in equity on December 31, 2023? 6. What amount of impairment loss should be reported by Panganiban Company on December 31, 2025. hlam)According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? 1.The main purpose of depreciation is to reflect the fall in value of an asset over its useful life 2.When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement 3.The provision for depreciation ensures that there are funds available to replace an asset when this becomes necessary, though in times of inflation, additional amounts may need to be set aside 4.A change in depreciation method constitutes a change in accounting policy and must be accounted for as such