acc 310 final ch. 11

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

A principal objection to the straight-line method of depreciation is that it

ignores variations in the rate of asset use.

The most common method of recording depletion for accounting purposes is the

units-of-production method.

Which of the following disclosures is not required in the financial statements regarding depreciation?

Details demonstrating how depreciation was calculated.

21. Which of the following is true of depreciation accounting?

It is not a matter of valuation, It is part of the matching of revenues and expenses, and It is the process of cost allocation. (ALL OF THESE)

Depreciation is normally computed on the basis of the nearest

full month and to the nearest dollar.

A major objective of MACRS for tax depreciation is to

help companies achieve a faster write-off of their capital assets.

The book value of a plant asset is

the asset's acquisition cost less the total related depreciation recorded to date.

The computation of depreciation under MACRS differs from the GAAP computation except for

the determination of asset cost.

A change in estimate should

be handled in current and future periods.

Which of following is not a similarity in the accounting treatment for depreciation and depletion?

Both depreciation and depletion are based on time

McDonald Company acquired machinery on January 1, 2012 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2017, McDonald estimated that the remaining life of this machinery was six years with no salvage value. How should this change be accounted for by McDonald?

By setting future annual depreciation equal to one-sixth of the book value on January 1, 2017

Which of the following is a realistic assumption of the straight-line method of depreciation?

Depreciation is a function of time rather than a function of usage

The rate of return on total assets is computed by dividing

Net income by average total assets.

Economic factors that shorten the service life of an asset include

Obsolescence, supersession, and inadequacy.

Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?

Salvage value

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Systematic and rational allocation

Of the following costs related to the develop¬ment of natural resources, which one is not a part of depletion cost?

Tangible equipment costs associated with machinery used to extract the natural resource

Which of the following is not a difference between the accounting treatment for depreciation and depletion?

The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year is the starting point for the periodic charge for depletion

Which of the following most accurately reflects the concept of depreciation as used in accounting?

The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?

What product or service is the asset related to?

Composite or group depreciation is a depreciation system whereby

a straight-line rate is computed by dividing the total of the annual depreciation expense for all assets in the group by the total cost of the assets.

Worley Truck Rental uses the group depreciation method for its fleet of trucks. When it retires one of its trucks and receives cash from a salvage company, the carrying value of property, plant, and equipment will be decreased by the

cash proceeds received.

When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to

determine depreciation expense for the full year and then prorate the expense between the two periods involved.

Each year a company has been investing an increasingly greater amount in machinery. Since there is a large number of small items with relatively similar useful lives, the company has been applying straight-line depreciation at a uniform rate to the machinery as a group. The ratio of this group's total accumulated depreciation to the total cost of the machinery has been steadily increasing and now stands at .75 to 1.00. The most likely explanation for this increasing ratio is the

estimated average life of the machinery is less than the actual average useful life.

Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should

include a credit to the equipment accumulated depreciation account.

The activity method of depreciation

is a variable charge approach.

Depletion expense

is usually part of cost of goods sold.

For the composite method, the composite

life is the total depreciable cost divided by the total annual depreciation.

The asset turnover is computed by dividing

net sales by average total assets.

Dividends representing a return of capital to stockholders are not uncommon among companies which

none of these answers are correct.

Each of the following are physical factors affecting depreciation except

obsolescence.

Reserve recognition accounting

requires estimates of future production costs, the appropriate discount rate, and the expected selling price of oil and gas reserves.

Use of the double-declining balance method

results in a decreasing charge to depreciation expense, means salvage value is not deducted in computing the depreciation base, and means the book value should not be reduced below salvage value. (ALL OF THESE)

The major difference between the service life of an asset and its physical life is that

service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last.

A general description of the depreciation methods applicable to major classes of depreciable assets

should be included in corporate financial statements or notes thereto

The term "depreciable base," or "depreciation base," as it is used in accounting, refers to

the total amount to be charged (debited) to expense over an asset's useful life.

For income statement purposes, depreciation is a variable expense if the depreciation method used is

units-of-production.

If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

vary with production.


Set pelajaran terkait

Micro Study Guide Chapters 1,2,3,6

View Set

H World History - Chapter 7 (7.1 - 7.3 Notes, Class Notes)

View Set

CW3 Chemical reactions involve rearranging atoms to form new substances; during a chemical reaction mass is not created or destroyed

View Set

NUR334 PrepU: Chapter 44 - Disorders of the Skeletal System: Metabolic and Rheumatic Disorders

View Set

Peds Exam 3- Intracranial Regulation

View Set

Structure and Function of Mitochondria, Golgi Apparatus, Lysosomes & Choroloplast

View Set

Chpt 23: conditions occurring after delivery

View Set

NCLEX Maternity Practice Test Reminders

View Set