Which depreciation method ignores residual value when computing the depreciable base of an asset? a. sum-of-the-year's-digits b. double-declining-balance c. composite depreciation d. group depreciation

Which depreciation method ignores residual value when computing the depreciable base of an asset? a. sum-of-the-year's-digits b. double-declining-balance c. composite depreciation d. group depreciation

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Description: Which depreciation method ignores residual value when computing the depreciable base of an asset?a. sum-of-the-year's-digitsb. double-declining-balancec. composite depreciationd. group depreciation

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 4DQ

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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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Which method of deprecaution is used when the cost of an asset is written off in equal amounts over its expected economic life? A fixed instalment B accelerated C sum of the digits D diminishing balance