A company should use an accelerated depreciation method because of the large decline in the value of an asset early in its life. Evaluate this statement.View Solution: A company should use an accelerated depreciation method because
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A company should use an accelerated depreciation method because of the large decline in the value of an asset early in its life. Evaluate this statement.View Solution:
A company should use an accelerated depreciation method because
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- 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 FalseExplain why most companies use the straight-line method, despite the benefits of accelerated depreciation.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.
- Question: Which method of depreciation results in a higher depreciation expense in the early years of an asset's life, making it more suitable for assets that rapidly lose their value? A) Straight-Line Depreciation B) Declining Balance Depreciation C) Units-of-Production Depreciation D) Sum-of-the-Years'-Digits DepreciationWhich of the following statement best describes depreciation? a. It is a means of spreading the payment for non-current assets over a period of years b. It is a decline in the market value of assets c. It is a means of spreading the cost of non-current assets over the estimated useful life d. It is a means of estimating the amount of money needed to replace the assetsWhich of the following is considered when depreciating an asset under the cost model? The cost of the asset. The change in the fair value of the asset. The useful life of the asset. Both a and b. Which of the following depreciation methods will most likely result in the highest amount of reported profit in the early years of an asset’s useful life? Straight line 150% declining balance Double declining balance Sum-of-the-years’ digits The most commonly used depreciation method is the straight-line method. replacement method. depreciation method based on revenue. inventory method.
- A company should use a depreciation method that: Group of answer choices is randomly selected best reflects the asset’s decline in revenue-producing ability for the company. maximizes net income for the company a different method each yearMany companies use an accelerated depreciation method because: A. It is required by the tax code.B. It is required by financial reporting rules.C. It yields larger depreciation expense in the early years of an asset's life.D. It yields a higher income in the early years of the asset's useful life.E. The results are identical to straight-line depreciation.Which of the following statements is true regarding depreciation methods?a. The use of a declining balance method of depreciation will produce lower depreciation charges in the early years of an asset’s life compared to the straight-line depreciation method.b. Over the life of an asset, a declining balance depreciation method will recognize more depreciation expense relative to the straight-line method.c. The use of a declining balance method instead of the straight-line method will produce higher book values for an asset in the early years of the asset’s life.d. The use of a higher estimated life and a higher residual value will lower the annual amount of depreciation expense recognized on the income statement
- 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 valueWhich of the following statements about depreciation is not true? A. Depreciation does not mirror the actual loss of value over time. B. Depreciation is the allocation of the asset’s cost to expense over the expected years of use. C. If the fair value of the asset increases, depreciation is reversed to reflect the change in value. D. U.S. GAAP requires depreciation methods to be systematic and rational.Should depreciation continue to be recorded on a buildingwhen ample evidence exists that the current market value isgreater than original cost and that the rising trend of marketvalues is continuing? Explain.