Which of the following is correct about the comparison of straight-line and accelerated depreciation method?
a. Straight-line depreciation method accelerates expense recognition in early years of an asset's life.
b. Aggressive managers tend to use straight-line depreciation method in early years of an asset's life.
c. Accelerated depreciation method accelerates revenue recognition in early years of an asset's life.
d. Accelerated depreciation method increases current earnings in early years of an asset's life.
e. Both C and D.
In straight-line depreciation equal amount is depreciated throughout the useful life of asset and deprecation amount per year = (Asset’s cost – salvage value of asset at the end of its life)/useful life of the asset.
In the accelerated depreciation method is more deductions are allowed at initial years of asset’s use and it get reduced for passing years as it is assumed that asset is more efficient in its initial periods and it is capable of generating more revenue.
Therefore correct statement about the comparison of straight-line and accelerated depreciation method is accelerated depreciation method accelerates revenue recognition in early years of an asset's life.
Therefore correct answer is option c. Accelerated depreciation method accelerates revenue recognition in early years of an asset's life.
All other statements are wrong because -
Which of the following is correct about the comparison of straight-line and accelerated depreciation method? a....
Which of the following statements about straight-line depreciation is correct? Multiple Choice The straight line method of depreciation results in a straight-line increase of depreciation expense over the life of an asset. Straight-line depreciation is an approved method to allocate the cost of an asset to expense and it serves as a measure of the physical decline in the asset. When the straight-line method is used to compute depreciation, an asset's carrying value remains constant over the life of the...
1. Which of the following is not needed to calculate annual straight-line depreciation? a. fair value one year after acquisition b. cost of the asset c. estimated useful life d. estimated salvage value 2. Depreciation methods which take larger amounts of depreciation in the early years of an asset's useful life are referred to as a. accelerated b. aggressive c, cost based d. unauthorized
Week 6: Straight Line Method and Accelerated Depreciation Respond to the question below: Explain the difference between the straight-line method of depreciation and accelerated depreciation. When might each be used? How is the sum of the years digits method derived?
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
$19,000 $15,000. $4,000. $34,000. D Question 10 If the straight-line method of depreciation of an asset with a 5-year life expectancy and no salvage valu percentage of cost that is recognized as depreciation expense for the first two years of the asset's lifell 25% and 25%. 40% and 20%. 40% and 40%. 20% and 20%.
Straight-Line Depreciation Rates Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage, assuming that the residual value of the fixed asset is to be ignored: (a) 4 years, (b) 8 years, (c) 10 years, (d) 16 years, (e) 25 years, (f) 40 years, (g) 50 years. If required, round your answers to two decimal places. Years Percentage 4 years 8 years 10 years 16 years 25 years 40 years 50 years...
1.) Discuss the difference between the straight-line method of depreciation and the accelerated methods. Why do companies use different depreciation methods for tax reporting and financial reporting? 2.) What is the purpose of listing the account “Commitments and contingencies” on the balance sheet even through no dollar amounts appear? 3.) How is it possible for a company with positive retained earnings to be unable to pay a cash dividend? 4.) The King Corporation has total annual revenue of $800,000; expenses...
Which of the following statements is CORRECT? a. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 years or longer. b. Using accelerated depreciation rather than straight line would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV. c. Since depreciation is not a cash expense, it has no effect on cash flows and thus no...
straight line depreciation rates convert each of the following estimates of useful life to straight ness-to-Bu. Mal Haley Elizabeth Hug. Inbox (777) - haleyehughe. Chap 10 HHVVN CengageNOWV2 Online. (6) Jamie Swanson Smey + Book Calculator Straight-Line Depreciation Rates Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage: (a) 10 years, (b) 8 years, (c) 25 years, (d) 40 years. (c) 5 years, 4 years, (g) 20 years. If required, round...
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...