Depreciation Methods

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Depreciation Methods

Depreciation MethodsAccounting Play 12022-11-07T16:35:10+00:00

Quiz - Depreciation Methods

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2Question 1-10

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1. Depreciation expense appears on the following financial statement:
- Statement of retained earnings
- Income statement
- Balance sheet
- Magic statement
2. What is the point of depreciation?
- To confuse accounting students
- To confuse accounting students
- To create book to tax differences
- Capture the decline in asset use value over time
3. What could potentially be included in the cost of a building constructed by a business?
- Furniture
- Computers
- Capitalized interest on building loan
- All of the above
4. Accumulated amortization appears on the following financial statement:
- Statement of retained earnings
- Income statement
- Statement of shareholders' equity
- Balance sheet
5. What is a useful life for a depreciable asset?
- Actual time period asset lasts
- Estimated time period asset is expected to last
- Same as salvage value
- Present value calculations
6. Depreciation reduces asset value to fair market value on the balance sheet:
- True
- False
7. Why would a company want accelerated depreciation for tax purposes?
- Show higher profits for investors
- Accelerate expense to reduce tax
- Impress the bank
- Sell bonds
8. Accelerated depreciation methods generally:
- Incorporate salvage value
- Are used for intangibles
- Have less associated expense in early years
- Have more associated expense in early years
9. How might the gain on the sale of a depreciable asset look?
- Adjusted basis - sale price
- Sale price - adjusted basis
- Fair market value - adjusted basis
- Adjusted basis - fair market value
10. The US tax code sometimes allows for 100% effective depreciation elections of an asset in the first year:
- True
- False
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