Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 7, Problem 7.2.1MBA
To determine
Concept Introduction:
The fixed assets are of two types, one is tangible and other is intangible. The tangible assets are those which can be touched i.e. having a physical presence. An asset which is used in the business for more than one year and is subject to
Depreciation is the expense which is debited to income statement against the cost of asset i.e. cost of using the asset in the business or in other words, reduction in value due to wear, tear and obsolescence of the asset over its life.
The double-declining-balancing method is the method of computing the depreciation at the rate
The effects of using double-declining-balance depreciation instead of the straight-line method.
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Which of the following depreciation methods applies a uniform depreciation rate each period to an asset's carrying amount?
a.Straight-lineb.Declining-balancec.Sum-of-the-years'-digitsd.Units-of-production
The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the
a.straight-line method.
b.declining-balance method.
c.sum-of-the-years'-digit method.
d.units-of-production method.
Under what depreciation method(s) is an asset’s bookvalue used to calculate depreciation each year?a. Straight-line methodb. Units-of-production methodc. Declining-balance methodd. Weighted-average-cost method
Chapter 7 Solutions
Survey of Accounting (Accounting I)
Ch. 7 - Which of the following expenditures incurred in...Ch. 7 - What is the amount of depreciation, using the...Ch. 7 - An example of an accelerated depreciation method...Ch. 7 - Prob. 4SEQCh. 7 - Prob. 5SEQCh. 7 - Which of the following qualities are...Ch. 7 - Prob. 2CDQCh. 7 - Prob. 3CDQCh. 7 - Prob. 4CDQCh. 7 - Are the amounts at which fixed assets are reported...
Ch. 7 - a. Does the recognition of depreciation in the...Ch. 7 - Backyard Company purchased a machine that has a...Ch. 7 - Is it necessary for a business to use the same...Ch. 7 - Prob. 9CDQCh. 7 - Prob. 10CDQCh. 7 - Prob. 11CDQCh. 7 - Prob. 12CDQCh. 7 - Prob. 13CDQCh. 7 - Prob. 14CDQCh. 7 - Prob. 15CDQCh. 7 - Costs of acquiring fixed assets Summer Wilks owns...Ch. 7 - Determine cost of land Snowy Ridges Ski Co. has...Ch. 7 - Determine cost of land Four Corners Delivery...Ch. 7 - Nature of depreciation Custer Construction Co....Ch. 7 - Straight-line depreciation rates Convert each of...Ch. 7 - Straight-line depreciation A refrigerator used by...Ch. 7 - Depreciation by two methods A Caterpillar tractor...Ch. 7 - Depreciation by two methods Equipment acquired at...Ch. 7 - Partial-year depreciation Sandblasting equipment...Ch. 7 - Capital and revenue expenditures About Time...Ch. 7 - Capital and revenue expenditures Dehra Bundy owns...Ch. 7 - Prob. 7.12ECh. 7 - Sale of asset Equipment acquired on January 9,...Ch. 7 - Disposal of fixed asset Equipment acquired on...Ch. 7 - Recording depletion MacLean Mining Co. acquired...Ch. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Book value of fixed assets Apple. Inc., designs,...Ch. 7 - Balance sheet presentation List the errors you...Ch. 7 - Prob. 7.1.1PCh. 7 - Allocate payments and receipts to fixed asset...Ch. 7 - Prob. 7.1.3PCh. 7 - Compare three depreciation methods Bayside...Ch. 7 - Depreciation by two methods; partial years Knife...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Amortization and depletion entries Data related to...Ch. 7 - Prob. 7.5.2PCh. 7 - Prob. 7.1MBACh. 7 - Prob. 7.2.1MBACh. 7 - Prob. 7.2.2MBACh. 7 - Prob. 7.3.1MBACh. 7 - Prob. 7.3.2MBACh. 7 - Prob. 7.3.3MBACh. 7 - Prob. 7.3.4MBACh. 7 - Prob. 7.4MBACh. 7 - Prob. 7.5.1MBACh. 7 - Asset turnover United Continental Holdings. Inc.,...Ch. 7 - Prob. 7.6.1MBACh. 7 - Prob. 7.6.2MBACh. 7 - Prob. 7.7.1MBACh. 7 - Prob. 7.7.2MBACh. 7 - Prob. 7.8.1MBACh. 7 - Prob. 7.8.2MBACh. 7 - Prob. 7.9.1MBACh. 7 - Prob. 7.9.2MBACh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3.1CCh. 7 - Prob. 7.3.2CCh. 7 - Effect of depreciation on net income Einstein...Ch. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.6C
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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.arrow_forwardUsing the information from EA7, calculate depreciation using the straight-line method.arrow_forwardThe straight-line method of depreciation allocates the cost of an asset more rapidly than the sum-of-the-years-digits method.arrow_forward
- The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of months or years is called the a.units-of-production method. b.straight-line method. c.declining-balance method. d.sum-of-the-years'-digits method.arrow_forwardA method of depreciation whereby the amount to recover is spread uniformly over the estimated life of the asset in terms of the periods or units of output. Straight line method Sinking fund method Declining balance method Sum of the Years Digit methodarrow_forwardWhich depreciation method would result in the same depreciation expense amount regardless of the partial period cor Select one: a. Sum-of-the-years'-digits b. Declining-balance c. Units-of-production d. Straight-linearrow_forward
- Which of the following methods applies a declining depreciation rate each period to an asset's constant value? a.Double-declining-balance methodb.Straight-line methodc.Sum-of-the-years'-digits methodd.Units-of-production methodarrow_forwardIndicate whether each of the following statements is true or false. Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Answer An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year Answer The declining-balance method does not deduct the residual value in computing the depreciation base. Answerarrow_forwardConsider the data in the following two tables: Identify the depreciation method used for each depreciation schedule as one of the following:(a) Double-declining-balance depreciation(b) Straight-line depreciation(c) DOB with conversion to straight-line depreciation, assuming a zero salvage value(d) MACRS seven-year depreciation with the half-year convention(e) Double-declining-balance (with conversion to straight-line depreciation)arrow_forward
- Contrast the effects of the straight-line, declining-balance, and activity-based methods on annual depreciation expense.arrow_forwardMACRS-GDS deductions are a combination of which other methods of depreciation? a. Sum of Years Digits and Straight Line b. Sum of Years Digits and Declining Balance c. Double Declining Balance and 150% Declining Balance d. Double Declining Balance and Straight Line.arrow_forwardDescribe the diff erent depreciation methods for property, plant, and equipment and theeff ects of the choice of depreciation method and the assumptions concerning useful life andresidual value on depreciation expense, financial statements, and ratios.arrow_forward
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