Answered: Why would a company use accelerated…

Business

Accounting

Why would a company use accelerated depreciation instead of straight-line depreciation

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 5DQ: What is a relevant cost? Explain why depreciation on an existing asset is always irrelevant.

See similar textbooks

Related questions

Q: The manager of your company said that he and his board members do not understand the depreciation of…

A: Depreciation is the gradual decrease of a fixed asset's estimated expense. Buildings, fixtures, and…

Q: A company will account for some events for long-term assets that are less routine than recording…

A: Answer (6): True

Q: How does straight-line depreciation work? What about descending?

A: Depreciation - Depreciation means wear and tear of the assets owned by the company. Depreciation is…

Q: It is a permanent reduction in the value of a company's asset Depreciation Impairment Revaluation…

A: The term depreciation applies to tangible assets like machinery, furniture, vehicles and building…

Q: Which of the following transactions would not increase the fixed asset turnover ratio? Group of…

A: Fixed asset turnover ratio is calculated by dividing Net sales revenue by average fixed assets. A…

Q: Which depreciation method ignores residual value until the last year of depreciation? Why?

A: Double declining method of depreciation does not consider residual value while calculating…

Q: The following are deductible losses, except: * Loss on disposal of delivery truck Loss sustained…

A: The answer for the multiple choice question and relevant explanation are presented hereunder : In…

Q: Which depreciation method would best reflect the risk of obsolescence from rapid technological…

A: Depreciation is the reduction in the value of the tangible assets such as building, motor vehicles,…

Q: Why are the costs of plant/long term assets recovered through depreciation vs. expensed out during…

A: Introduction: Depreciation refers to two aspects of the same concept: first, the actual decrease in…

Q: When a company changes the way it depreciates an asset in midstream, what change would be made to…

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to…

Q: Is there any evidence to suggest that the straight-line depreciation approach is more often used

A: The question tells about the straight-line depreciation approach is more often used

Q: Why do most of the firms select straight-line depreciation for book depreciation?

A: Straight Line Depreciation method is a method in which original cost of asset after salvage value is…

Q: True or False: Depreciation is the decline in the market value of tangible fixed assets.

A: Fixed assets are assets having a life of more than one year. Fixed assets like buildings, equipment,…

Q: Detailed Explanation needed. Advantages and Disadvantages of methods of depreciation ( Straight…

A: The efficiency of the assets will reduce over the period. To record this reduction in the…

Q: Please explain double-declining method depreciation. When is this the preferred method to figure…

A: The double-declining balance method is a method to calculate depreciation. Depreciation as per…

Q: preciate assets such as buildings even though those assets may be increasing in value. Why?

Q: Is residual value deductible when using accelerated method of depreciation>

A: The accelerated method of depreciation includes double declining balance method, 150% declining…

Q: 1. Is it necessary for a business to use the same method of computing depreciation for all classes…

A: Depreciation is an accounting method for allocating a tangible or physical asset’s cost over its…

Q: What is the double declining balance method of depreciation?

A: Depreciation: Depreciation is the permanent decrease in the monetary value of an asset over the…

Q: Why are the costs of plant/long term assets recovered through depreciation vs. expensed out during…

A: Depreciation is referred to a decrease in the value of the fixed assets. It is a permanent loss. The…

Q: Why would companies choose one method of accounting for Depreciation over another method? What are…

A: Most companies choose one method of accounting over another method on the basis of the accounting…

Q: A company is deciding whether to purchase a new machine or not, which among the following is not a…

A: A company is deciding whether to purchase a new machine or not is deiced by the Net present value of…

Q: are depreciation methods important in the business arena? Explain the differences among the…

A: Depreciation refers to the concept of determining the rate at which an asset is diminishing in its…

Q: What are some factors that could explain the predominant use of the straight-line depreciation…

A: Straight-line Depreciation:Under the straight-line method of depreciation, the same amount of…

Q: Assuming that there are no income taxes, which of the following is correct concerning depreciation?…

A: Depreciation is reduction in value of asset due to wear and tear of asset with the passage of time…

Q: How do you know the ratesw on straight line depreciation?

A: Solution:- The following way to find depreciation rates on straight line depreciation method as…

Q: Which of the following statements is true regarding depreciation methods?a. The use of a declining…

A: The value of assets goes on decreasing with the passage of time due to various reasons such as…

Q: Can depreciation be a profit management tool for the enterprise? Please explain with reason.

A: Definition: Depreciation: Depreciation means fall in the value of an asset, its a process of…

Q: What are some of the simplifying conventions a company can use to calculate depreciation for partial…

A: Partial period depreciation: Partial period depreciation is calculated when acquisition and disposal…

Q: Should depreciation continue to be recorded on a buildingwhen ample evidence exists that the current…

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due…

Q: Which of the following statements is the assumption on which straight line depreciation is based?…

A: Straight line method is the most simplest method of charging depreciation on Plant, Machines,…

Q: Discuss when should a company in the extractive industries start accounting for its restoration…

A: Answer are as follows

Q: Explain why most companies use the straight-line method, despite the benefits of accelerated…

A: Accelerated depreciation is a type of method of depreciation in which an asset's book value…

Q: QUESTION 19 When a company decreases the estimated useful life of a PP&E asset O a. It is admitting…

A: Depreciation refers to a decline in asset value over its useful life.

Q: Why would someone choose a slower alternative depreciation method?

A: ADS stand for Alternative Depreciation System. In this system, amount of depreciation is set as same…

Question

Why would a company use accelerated depreciation instead of straight-line depreciation?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Solution

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Why do most of the firms select straight-line depreciation for book depreciation?
Explain why most companies use the straight-line method, despite the benefits of accelerated depreciation.
Why would companies choose one method of accounting for Depreciation over another method? What are the benefits of each depreciation type?
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?
Can the selection of a depreciation method affect a company’s asset replacement policy (i.e., the timing of its asset replacement)? If so, how?
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?
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?
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 value
What is a relevant cost? Explain why depreciation on an existing asset is always irrelevant.
What industry would most likely use the straight-line and units of activity depreciation methods and explain why they would use those methods.
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.
Can depreciation be a profit management tool for the enterprise? Please explain with reason.