Concept explainers
Double-declining-balance method: It is an accelerated method of
To identify: which depreciation method ignores residual value until the last year of depreciation.
To explain: the reason for ignoring the residual value until the last year of depreciation.
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
- The straight-line method of depreciation allocates the cost of an asset more rapidly than the sum-of-the-years-digits method.arrow_forwardHow are intangible assets with an indefinite life treated? A. They are depreciated. B. They are amortized. C. They are depleted. D. They are tested yearly for impairment.arrow_forwardWhich combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired? B . Declining balance depreciation with a long useful life.arrow_forward
- Which combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired? C . Declining balance depreciation with a short useful life.arrow_forwardWhy does the depreciation included in computing the annual cost of annual worth method but not in computing the total cost of present and future worth method ?arrow_forwardWhat is the depreciation for the current year?arrow_forward
- Is residual value deductible when using accelerated method of depreciation>arrow_forwardQuestion: 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 Depreciationarrow_forwardWhich 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 assetsarrow_forward
- Which of the following depreciation methods initially ignores salvage value in its calculation? a.Declining-balanceb.Sum-of-the-years'-digitsc.Straight-lined.Units-of-productionarrow_forwardWhat are the estimates when calculating depreciation? Which estimates may be revised?arrow_forwardWhy may it be necessary to revise the estimated life of a plant asset? When the estimated life is revised, does it affect the amount of depreciation per year? Why or why not?arrow_forward
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