Accounting Chapter 9 Learnsmarts

lower, higher

Assuming straight-line depreciation is used, a higher estimated useful life will result in a(n) __________________ depreciation expense per year and a(n) ____________________ net income

total assets, net income, and asset book value

The entry to record annual straight-line depreciation will decrease a company's ________________________, ______________________________, and __________________________.

Straight-line depreciation

does the best job of matching the expense with the related revenue when an asset is used evenly over its useful life

declining-balance depreciation

is the best method to use when an asset is productive in its earlier years but quickly loses its usefulness

units-of-production depreciation

is the best method to use when the amount of an asset's use varies significantly from one accounting period to another

Straight-Line Depreciation Formula

(Cost-Residual Value)/Useful Life

Transaction for Cost + Transportation + Installation

$320,750 debit to machinery $315,000 credit to note payable $5750 credit to cash

Units of Production Formula

(Cost - Residual Value) x (Actual Production this Period / Estimated Total Production)

debit to equipment and a credit to cash

A company bought a new computer for $5,000. The computer should be recorded as a _________________________________.

capitalized as part of the cost of the theater

An old theater was renovated. The renovation costs should be ___________________________.

Book Value

Cost - Accumulated Depreciation

Straight Line, Units of Production, declining-balance

Depreciation Methods:

asset

If a cost is capitalized, it is recorded as a(n) ___________________________, not an expense

Fixed Asset Turnover Ratio

Net Revenue/ Average Net Fixed Assets

expense recognition (matching) principle

Recording depreciation is an application of the _______________________________________

accumulated depreciation

Which account is credited in an adjusting entry to record depreciation?

balance sheet

Which financial statement shows tangible assets?