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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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The composite depreciation method:

  1. a. is applied to a group of homogeneous assets
  2. b. is an accelerated method of depreciation
  3. c. does not recognize gain or loss on the retirement of single assets in the group
  4. d. excludes residual value from the base of the depreciation calculation

To determine

Identify the correct option for the given statement.

Explanation

Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived operating assets or plant assets for the period the asset is used.

Composite deprecation is a method that the company may apply for the heterogeneous assets which are related to each other but have different service lives or salvage values. Composite depreciation method is used to depreciate the integrated assets instead of deprecating each asset separately. The objectives of composite depreciation method are,

  • It is used to combine all assets in one asset account and gets depreciated accordingly...

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