Homework Answers
Answer : Option (A) the net book value of the asset halfway through its useful life will be less than if straight line depreciation is used
When Accelerated Depreciation methods like Double Decline balance method and Sum of years digits method is used to calculate Depreciation on assets the net book value of the assets decreases at the early years faster than the later years. So As compared to straight line method the net book value of the asset halfway through its useful life is less. For example when asset value is 100,000 and using straight line method depreciation at 10% Depreciation. Then the depreciation is $10,000 after completing first years and asset value is $90,000.
If Accelerated Depreciation method like Double Decline balance method is used then the depreciation is 10%+10% = 20%. Then the depreciation is $20,000 and Net asset value at the end of first year is $80,000.
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5& 6 Question 15 (of 20) When an accelerated depreciation method is used to calculate depreciation...
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for...
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for you to consider these different methods when evaluating firms. The impact of different depreciation methods is stronger for asset-intensive firms. Major factors that affect the depreciation of a fixed asset include the purchase cost, residual/salvage value, and estimated useful life of the asset. The purchase cost includes the asset's explicit cost plus necessary costs associated with setting up and operating the asset (such as...
An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the...
An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its useful life. T or F
How is depreciation allocated when using the straight-line method? Depreciation expense is allocated in proportion to...
How is depreciation allocated when using the straight-line method? Depreciation expense is allocated in proportion to an asset's use in operations A constant percentage of an asset's book value as of the beginning of each period is allocated to depreciation expense • An equal amount of depreciation expense is allocated each period of an asset's useful life Salvage value is the expected net recovery when the asset is sold or removed from service. • True False
Signify TRUE or FALSE as applicable for each of the following items as they pertain to...
Signify TRUE or FALSE as applicable for each of the following items as they pertain to depreciation. [T/F] a. Accelerated deprecation is better suited for situations where assets become worn based on usage rather than passable of time. b. Accelerated depreciation means that the asset is depreciated in fewer periods than other depreciation methods. c. Units of production is better suited for situations where usage varies from period to period. d. Accelerated depreciation ignores salvage value and allows a business...
Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated...
Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. Speedway prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. Consider the first year that Speedway uses the truck. Identify the depreciation method that meets the company's objectives. Print Done Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation,...
14.1 Using the Straight Line (SL) depreciation method, what is the (a) annual depreciation charge, Dt=?,...
14.1 Using the Straight Line (SL) depreciation method, what is the
(a) annual depreciation charge, Dt=?, (b) the total accumulated
depreciation charge, D4=? , at the end of year 4, and (c) the book
value, BV=? , at the end of year 4, for an automobile with a
Five-year useful life that has a first cost of $19,657 and an
$8,418.40 salvage value?
14.1 Using the Straight Line (SL) depreciation method, what is the (a) annual depreciation charge, DF?, (b)...
Porter Inc, acquired a machine that cost $373,000 on October 1, 2019. The machine is expected...
Porter Inc, acquired a machine that cost $373,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $45,000 at the end of its life. Porter uses the calendar year for financial reporting Depreciation expense for one fourth of a year was recorded in 2019 Required: o. Using the straight line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31,...
Blueprint Connection: Depreciation Methods Depreciation is the process of allocating the cost of an asset to...
Blueprint Connection: Depreciation Methods Depreciation is the process of allocating the cost of an asset to expense over the asset's estimated useful life. The amount depreciated is the cost of the asset less the asset's expected residual value. depreciation method allocates larger amounts of depreciation expense to earlier periods of an asset's life and smaller amounts of depreciation expense to later periods of an asset's life. depreciation allocates an equal amount of the asset's cost to depreciation expense for each...
Instructions Using the straight-line method of depreciation, calculate the depreciation expense, accumulated depreciation balance, and book...
Instructions Using the straight-line method of depreciation, calculate the depreciation expense, accumulated depreciation balance, and book value for each of the four years of the van's useful life. a. Enter all amounts as positive values. Do not use a minus sign or parentheses for any values to be subtracted. (Always use cell references and formulas where appropriate to receive full credit. If you copy paste from the Instruction tab you will be marked wrong.) Total Points Total Points A B...
Porter Inc acquired a machine that cost $365,000 on October 1, 2019. The machine is expected...
Porter Inc acquired a machine that cost $365,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $36.000 at the end of its life. Porter uses the calendar year for financial reporting. Depreciation expense for one-fourth of a year was recorded in 2019 Required: a. Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31, 2021, and...
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for you to consider these different methods when evaluating firms. The impact of different depreciation methods is stronger for asset-intensive firms. Major factors that affect the depreciation of a fixed asset include the purchase cost, residual/salvage value, and estimated useful life of the asset. The purchase cost includes the asset's explicit cost plus necessary costs associated with setting up and operating the asset (such as...
How is depreciation allocated when using the straight-line method? Depreciation expense is allocated in proportion to an asset's use in operations A constant percentage of an asset's book value as of the beginning of each period is allocated to depreciation expense • An equal amount of depreciation expense is allocated each period of an asset's useful life Salvage value is the expected net recovery when the asset is sold or removed from service. • True False
Requirements 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. 2. Speedway prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. Consider the first year that Speedway uses the truck. Identify the depreciation method that meets the company's objectives. Print Done Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation,...
14.1 Using the Straight Line (SL) depreciation method, what is the
(a) annual depreciation charge, Dt=?, (b) the total accumulated
depreciation charge, D4=? , at the end of year 4, and (c) the book
value, BV=? , at the end of year 4, for an automobile with a
Five-year useful life that has a first cost of $19,657 and an
$8,418.40 salvage value?
14.1 Using the Straight Line (SL) depreciation method, what is the (a) annual depreciation charge, DF?, (b)...
Porter Inc, acquired a machine that cost $373,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $45,000 at the end of its life. Porter uses the calendar year for financial reporting Depreciation expense for one fourth of a year was recorded in 2019 Required: o. Using the straight line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31,...
Blueprint Connection: Depreciation Methods Depreciation is the process of allocating the cost of an asset to expense over the asset's estimated useful life. The amount depreciated is the cost of the asset less the asset's expected residual value. depreciation method allocates larger amounts of depreciation expense to earlier periods of an asset's life and smaller amounts of depreciation expense to later periods of an asset's life. depreciation allocates an equal amount of the asset's cost to depreciation expense for each...
Instructions Using the straight-line method of depreciation, calculate the depreciation expense, accumulated depreciation balance, and book value for each of the four years of the van's useful life. a. Enter all amounts as positive values. Do not use a minus sign or parentheses for any values to be subtracted. (Always use cell references and formulas where appropriate to receive full credit. If you copy paste from the Instruction tab you will be marked wrong.) Total Points Total Points A B...
Porter Inc acquired a machine that cost $365,000 on October 1, 2019. The machine is expected to have a five-year useful life and an estimated salvage value of $36.000 at the end of its life. Porter uses the calendar year for financial reporting. Depreciation expense for one-fourth of a year was recorded in 2019 Required: a. Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the income statement for the year ended December 31, 2021, and...
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