Question

Indicate whether the following are TRUE or FALSE.

	A company had net sales of $545,000 and cost of goods sold of $345,000. Its gross margin equals $890,000.
	An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its useful life.
	Units of Production is an accelerated depreciation method.
_____	The term “depletion” as applied to intangible assets follows the matching principle.

Answer 1

A company had net sales of $545,000 and cost of goods sold of $345,000. Its gross margin equals $890,000.	FALSE
An accelerated depreciation method creates a larger depreciation charge as the asset comes closer to the end of its useful life.	FALSE
Units of Production is an accelerated depreciation method.	FALSE
The term “depletion” as applied to intangible assets follows the matching principle.	FALSE

1. gross margin = Net sales - Cost of goods sold = $545,000 - $345,000 = $200,000

2. An accelerated depreciation method creates larger depreciation charge at the beginning of the life of assets

3. Unit of production method is not an accelerated depreciation method. Double declining method and sum of years method are examples of accelerated depreciation method

4. The term depletion is applied to natural resources and not to Intangible assets