Answered: written down value method is more…

Business

Accounting

written down value method is more appropriate than the straight-line method

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 12DQ

See similar textbooks

Related questions

Q: For depreciation purposes, what would be the first cost of the new machine(depreciation base)?

A: Depreciation is the charge or expense to be accounted in the books against an asset of the…

Q: The method of depreciation which is also known as Accelerated depreciation method is a. Diminishing…

A: Depreciation expense is the reduction in the value of assets due to the wear and tear on that asset.…

Q: Salvage value is not considered directly in the determination of the deprecation amount with the…

A: Salvage value is also called the residual value. Salvage value is the estimated selling price of the…

Q: Explain why activity based method is more appropriate to calculate depreciation than straight line…

A: Depreciation is charged to allocate the cost of the asset over the useful life of the asset. It…

Q: What is the systematic periodic transfer of the cost of a fixed asset to an expense account during…

A: It is a measure of the wearing out, consumption or other loss of value of depreciable asset arising…

Q: Multiple Choice Depletion expense Excludes estimated restoration cost from the depletion base O Is…

A: A depletion expense means the levy against the profit which is used in natural resources. It is same…

Q: It is the gradual diminution of the useful value of tangible property resulting from wear and tear…

A: (i) Depreciation: Depreciation is the gradual decrease in the value of the asset due to wear and…

Q: Explain the differences between depreciation expense and impairment loss of property, plant and…

A: The difference between Depreciation and impairment is as follows: Depreciation Impairment It is…

Q: What is advantages and disadvantages of centralization and decentralization? -Explain Effects of…

Q: The factor that is not relevant in computing depreciation is

A: Depreciation is an accounting method used to allocate the cost of a tangible or physical asset over…

Q: How should intangible assets and property, plant, and equipment (PP&E) be treated when their service…

A: The Answer

Q: The cost of an item, an estimate of its salvage value, and an expected usable life are all factors…

A: The Answer

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: 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: Should the engineers be able to assess the reality of depreciating fixed assets?

A: A company should assess the position of its fixed asset and check for its impairment if condition…

Q: The following are the causes of functional depreciation except: a. obsolescence of the machine b.…

A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…

Q: can you give me an example of straight line depreciation and explain it

A: The straight-line basis is a depreciation method of estimation of depreciation expense on an asset.…

Q: To what extent do you consider the following items to be proper costs of the fixed asset? Give…

Q: Which of the following statements relating to intangible assets is true? A All intangible assets…

A: Intangible assets: These are the long-term assets which are not physical in nature, but possess…

Q: A method that excludes residual value from the base for the depreciation calculation

A: Depreciation base: Depreciation base is the amount that is allocated over the estimated service…

Q: True or false _________ Costs incurred that are directly attributable to the acquisition of a PPE…

A: Answer

Q: Which of the following is not a typical internal control over long-lived assets? a. Periodically…

A: Long-lived assets are those assets whose life is more than a year. Means those assets are in the…

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: On your own words, describe the methods that companies can implement to depreciate plant assets.

A: The methods to depreciate the plant assets are as follows, Straight Line Depreciation: This is also…

Q: It results not from a deterioration in the asset's ability to serve its intended purpose, but from a…

A: Depreciation is less in the value of asset. depreciation is a natural phenomenon in which the value…

Q: Verifying repair costs will be handled differently from auditing depreciation costs. What's the…

A: Answer: Repaid costs are the costs that pertains to the maintenance of the assets Depreciation costs…

Q: The certified public accountant is frequently called upon by management for advice regarding methods…

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

Q: Which method of depreciation is suitable when expenditure on repairs and maintenance, increases as…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Differential analysis can aid management in making decisions on a variety of alternatives, including…

Q: Evaluate the following statements: S1. When buildings and improvements are constructed in connection…

A: Depreciation is the charge on assets for the usage of assets during the period. Extracting natural…

Q: (d) On what basis should management select from these two methods to depreciate the machine? Justify…

A: The management should opt for reducing balance method of depreciation for the above scenario: This…

Q: Remodeling and rehabilitation: O Can usually be undertaken by the property manager without…

A: Rehabilitants and remodeling both are a different thing. Rehabilitations consists of renovating…

Q: Depreciation continues to be one of the most controversial, difficult, and important problemareas in…

A: Depreciation is the purposeful, gradual reduction in the reported value of an item over its useful…

Q: Which of the following is a false statement about depreciation? It has no impact on cash It…

A: The accelerated method is a method of charging the depreciation in which the higher amount of…

Q: The write-off of the cost of an intangible asset is called a.deterioration. b.functional…

A: Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Under what circumstances will you consider the reducing balance method as the most appropriate…

Q: raxton Inc. is considering the write-off of a limited-life intangible because of its lack of…

A: Limited Life Intangible Asset: Assets with the limited life are known as limited life intangible…

Q: A) What is residual value? Support your answer with an example ( word count 100)

A: Lets understand the basic. When person purchase the asset they expected that after the useful life…

Q: Which of the following items is not a consideration when recording periodic depreciation on plant…

A: In order to record the periodic depreciation on Plant Assets Cost, Salvage value and Estimated…

Q: When considering the replacement of old equipment, which of the following item is relevant?…

A: Relevant cost refers to the cost that affects the cash flows estimated for decision making.

Q: According to PAS 38, which of the following may be recognized as cost of intangible asset? a.…

A: Requirement is to find solutions to some MCQs

Q: Several expenditures are listed below. Indicate whether or not each expenditure would be included in…

A: Equipment cost includes Purchase Price ( Invoice price less deduction ) Transportation ( Freight…

Q: Depreciation is the allocation of the cost of a plant asset over its useful life in a rational and…

A: Depreciation is charged on assets for reducing their value which is a result of the use of the asset…

Q: Which one of the following items is not a consideration when recording periodic depreciation expense…

A: Depreciation is a method of reducing the value of an asset arising from use, efflux of time or…

Q: In a replacement analysis, the market value of the currently owned asset a. does not impact the cash…

A: With the passage of the time, old assets are outdated and more cost is incurred to maintain. So, it…

Q: Normally, depreciation should not be recognized on plant assets during their construction period.…

A: The depreciation expense is charged on fixed assets as reduction in value of fixed assets with the…

Q: a. Under what conditions is the use of the straightline depreciation method most appropriate?b.…

A: a. Explain the condition under which the straight-line depreciation method is the most appropriate…

Question

The organization prefers using Written down value method for the depreciation of Machinery instead of Straight-Line Method. Explain why the written down value method is more appropriate than the straight-line method of 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

Concept

VIEW

Preference of written down value method over straight line method

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

Depreciation continues to be one of the most controversial, difficult, and important problem areas in accounting. Required: 1. Explain the conventional accounting concept of depreciation accounting, and discuss its conceptual merit with respect to (a) the value of the asset, (b) the amount(s) expensed, and (c) the discretion of management in selecting the method. 2. Answer the following: a. Explain the factors that should be considered when applying the conventional concept of depreciation to the determination of how the value of a newly acquired computer system should be assigned to expense for financial reporting purposes. (Ignore income tax considerations for this case.) b. What depreciation methods might be used for the computer system?
Explain why activity based method is more appropriate to calculate depreciation than straight line method
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 are some factors that could explain the predominant use of the straight-line depreciation method?
Verifying repair costs will be handled differently from auditing depreciation costs. What's the rationale for the shift in strategy?
Under what conditions is the use of the straight-line depreciation method most appropriate?
Which statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.
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?
The use of accelerated methods is appropriate when the asset will be used more in the later periods versus earlier periods. True False The purpose of depreciation is to allocate the asset’s cost systematically and rationally over the life of the asset to ensure that the company has adequate capital for future replacement. True False
Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNext
Give reasons why depreciation methods are useful?
Should the engineers be able to assess the reality of depreciating fixed assets?