If machine hours are selected as a method of depreciation, which of the following statements is...
If machine hours are selected as a method of depreciation, which of the following statements is true? A. ADS applied, B. MACRS applies, C. Salvage value in excess of 10% of cost must reduce the depreciable basis. D. Salvage value is always disregarded
Homework Answers
Ans D SALVAGE VALUE IS ALWAYS DISREGARDED
Under this method, hourly rate of depreciation is calculated. The cost of the asset (less residual value if any) is divided by the estimated working hours. The actual depreciate for any given period depends upon the working hours during that year.
Depreciation per hour = Original cost of machine – Scrap Value, if any/ Estimated life of the machine in hours.
The special feature is that the life of the machine is found out not in years but in hours.
MACRS, or Modified Accelerated Cost Recovery System, is currently the method the IRS has approved for companies wanting to accelerate depreciation on business equipment. MACRS includes an asset classification system which shows the number of years of depreciation for each type of asset.
MACRS includes two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). These two systems provide different methods and recovery periods for calculating depreciation deductions.
Businesses generally use the General Depreciation System unless they are required to use the Alternative Depreciation System.
The General Depreciation System uses what's called a "declining balance" system of applying depreciation each year. That is, depreciation expense each year is based on the initial cost minus accumulated depreciation from all previous years.
How Does Alternative Depreciation Work?
The ADS system sets depreciation as an equal amount each year, except for the first and last year (because they might not be a full twelve months).
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If machine hours are selected as a method of depreciation, which
of the following statements is...
6. Regardless of the GAAP depreciation method selected ... a. the maximum allowable depreciation over the...
6. Regardless of the GAAP depreciation method selected ... a. the maximum allowable depreciation over the asset's life is the b. the total accumulated depreciation at the end of the asset's life will equal the depreciable base. c. the total accumulated depreciation at the end of the asset's life cannot exceed the depreciable base. d. all of the above. 7. On August 1 of the current year, a company with a December 31 year-end buys a nonresidential building for $600,000,...
which of the following statements is true regarding Depreciation? A.) In some instances it is acceptable...
which of the following statements is true regarding Depreciation? A.) In some instances it is acceptable to depreciate an asset below the slavage value. B.) In the declining balance method, subtract the salvage value from the cost of the asset and multiply the depreciate rate times that depreciable base. C.) When recording depreciation expense, credit the asset account dorectly. D.) The book value of an asset is the cost of the asset minus accumulated depreciation.
6. Regardless of the GAAP depreciation method selected.. a. the maximum allowable depreciation over the asset's...
6. Regardless of the GAAP depreciation method selected.. a. the maximum allowable depreciation over the asset's life is the same. b. the total accumulated depreciation at the end of the asset's life will equal the depreciable base. c. the total accumulated depreciation at the end of the asset's life cannot exceed the depreciable base. d. all of the above. On August 1 of the current year, a company with a December 31 year-end buys a nonresidential building for $600,000, which...
Project Management 1. The company treasurer must determine the best depreciation method for office furniture that...
Project Management
1. The company treasurer must determine the best depreciation method for office furniture that costs $50,000 and has a zero salvage value at the end of a 10 year depreciable life. Compute the depreciation schedule using: (a) Straight line (b) Double declining balance (C) Sum-of-years' -digits (d) Modified Accelerated Cost Recovery System (MACRS)
*THIS IS ONE QUESTION ONLY* Basic depreciation concepts Cost or factor depletion is based on _____________ level, not time as used in depreciation. The remaining, undepreciated amount of an...
*THIS IS ONE QUESTION ONLY*
Basic depreciation concepts
Cost or factor depletion is based on _____________ level, not
time as used in depreciation.
The remaining, undepreciated amount of an investment is known as
its ____________.
Percentage depletion is determined as a stated percentage
times___________.
The depreciable life of an asset is also known as the
_____________.
MACRS depreciation rates always write-off the asset's value to
_____________.
In the straight line method of depreciation, the depreciation
charge in the final year...
Calculate the annual Straight Line depreciation charge for a asset with a cost basis of $12,000,...
Calculate the annual Straight Line depreciation charge for a asset with a cost basis of $12,000, a depreciable life of 10 years, and a Salvage value of $2,000. If you believe the useful life of an asset will be 10 years, the Bonus Depreciation method allows for 100% depreciation in year 1, and the MACRS method indicates the depreciable life is 7 years, what is the useful life you should use in capital recovery economic analysis? SHOW ALL CALCULATIONS
Which of the following statements is false? Once you select a depreciation method, then you must...
Which of the following statements is false? Once you select a depreciation method, then you must use this method for all depreciable assets. The balance in the accumulated depreciation account will be the same at the end of an asset's useful life under all the methods allowed under GAAP. The book value at the end of an asset's useful life will be the same under all the depreciation methods allowed under GAAP. The annual depreciation expense and year-end book values...
6. Depreciation methods Firms can use various methods to calculate depreciation, and it is important for...
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Mattie Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data...
Mattie Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its year 2019 operations: Estimated manufacturing overhead $239,500 Estimated machine-hours 4,500 Actual manufacturing overhead $241,900 Actual machine hours 5,500 Use the data to answer the following questions (a - d). a. The predetermined overhead rate would be: b. The applied manufacturing overhead for the year is: c. Was the overhead for the year over applied or under applied? By how much? d. When...
6. Mattie Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following...
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6. Regardless of the GAAP depreciation method selected.. a. the maximum allowable depreciation over the asset's life is the same. b. the total accumulated depreciation at the end of the asset's life will equal the depreciable base. c. the total accumulated depreciation at the end of the asset's life cannot exceed the depreciable base. d. all of the above. On August 1 of the current year, a company with a December 31 year-end buys a nonresidential building for $600,000, which...
Project Management
1. The company treasurer must determine the best depreciation method for office furniture that costs $50,000 and has a zero salvage value at the end of a 10 year depreciable life. Compute the depreciation schedule using: (a) Straight line (b) Double declining balance (C) Sum-of-years' -digits (d) Modified Accelerated Cost Recovery System (MACRS)
*THIS IS ONE QUESTION ONLY*
Basic depreciation concepts
Cost or factor depletion is based on _____________ level, not
time as used in depreciation.
The remaining, undepreciated amount of an investment is known as
its ____________.
Percentage depletion is determined as a stated percentage
times___________.
The depreciable life of an asset is also known as the
_____________.
MACRS depreciation rates always write-off the asset's value to
_____________.
In the straight line method of depreciation, the depreciation
charge in the final year...
Which of the following statements is false? Once you select a depreciation method, then you must use this method for all depreciable assets. The balance in the accumulated depreciation account will be the same at the end of an asset's useful life under all the methods allowed under GAAP. The book value at the end of an asset's useful life will be the same under all the depreciation methods allowed under GAAP. The annual depreciation expense and year-end book values...
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6. Mattie Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its year 2019 operations: Estimated manufacturing overhead Estimated machine-hours Actual manufacturing overhead Actual machine hours $239,500 4,500 $241,900 5,500 Use the data to answer the following questions (8a - d). a. The predetermined overhead rate would be normal costing): b. The applied manufacturing overhead for the year is (normal costing): c. Was the overhead for the year over applied or under applied?...
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