When the amount of use of a plant asset varies from year to year, the method of determining depreciation that matches revenues and expenses would be: a. straight-line method b. double-declining balance method c. units-of-production method d. either straight-line or the double-declining method

When the amount of use of a plant asset varies from year to year, the method of determining depreciation that matches revenues and expenses would be: a. straight-line method b. double-declining balance method c. units-of-production method d. either straight-line or the double-declining method

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 4MC

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Question

When the amount of use of a plant asset varies from year to year, the method of determining depreciation that matches revenues and expenses would be:
a. straight-line method
b. double-declining balance method
c. units-of-production method
d. either straight-line or the double-declining method

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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.
The straight-line method of depreciation allocates the cost of an asset more rapidly than the sum-of-the-years-digits method.
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Under what depreciation method(s) is an asset’s bookvalue used to calculate depreciation each year?a. Straight-line methodb. Units-of-production methodc. Declining-balance methodd. Weighted-average-cost method
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The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the a.straight-line method. b.declining-balance method. c.sum-of-the-years'-digit method. d.units-of-production method.
Which of the following is true? a.If using the units-of-output method, it is possible to depreciate more than the depreciable cost. b.If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest. c.If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. d.Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.
A method of depreciation whereby the amount to recover is spread uniformly over the estimated life of the asset in terms of the periods or units of output. Straight line method Sinking fund method Declining balance method Sum of the Years Digit method
Indicate whether each of the following statements is true or false. Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Answer An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year Answer The declining-balance method does not deduct the residual value in computing the depreciation base. Answer
Which of the following best describes depreciation? A.ccounts for the market value of a physical asset B.Part of the cost of a physical asset allocated as an expense to each time period in which the asset is used. C.Shows the increase in value of a physical asset over the asset’s useful life D.Shows the drop in value of an asset when the asset is first used by an entity
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