Study Unit 8- Depreciation and Depletion
Ottawa Corp. uses the sum-of-the-years'-digits method of depreciation. In the third year of use of an asset with a 4-year estimated useful life, the portion of the depreciation cost for the asset that the entity will expense is
(2 yrs / (1+2+3+4)) 20%
Samoa Company 5
(8,400)
Auckland Co. 1,800,000
1,400,000
Lem Corp. 10,000
10,500
100,000
13,200
Samoa Company 5
14,400
Vorst Co. 1,200,000
144,000
Falkland Co. 550,000
16
Reed Co. 800,000
160,000
Pretoria Company 400,000
168,000
Miller Mining 2,800,000
210,000
Weir Co. 25,000
25,000
Spiro Corp. 20,000
3,800
Turtle Co. 50,000
38,000
Roswell Company 50,000
4,000
Canberra Company 100,000
40,600
Canberra Company 100,000
40,848
Falkland Co. 550,000
42,750/192,750
Falkland Co. 550,000
46,170
Santiago Corp. 400,000
5
Samoa Company 5
6,000
Sydney Co. 480,000
76,800
Roswell Company 50,000
8,000
Under which of the following depreciation methods is it possible for depreciation expense to be higher in the later years of an assets useful life?
Activity method based on units of production
Depreciation of a plant asset is the process of
Allocation of the asset's cost to periods use
In which of the following situtaions is the units of production method of depreciation most appropriate?
An asset's service potential declines with use
Which of the following reasons provides the best theoretical support for accelerated depreciation?
Assets are more efficient in early years and initially generate more revenue
A company using the composite depreciation method for its fleet of trucks, cars and campers retired one of its trucks and received cash from a salvage company. The net carrying amount of these composite asset accounts were decreases by the
Cash proceeds received
Which of the following statements is the assumption on which straightline depreciation is based?
Service value declines as a function of time rather than use
