Depreciation, impairments and depletion Fill-in-the-blanks quiz
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is a process of cost allocation, not valuation.
The cost of an asset is initially recorded as a(n) .
Depreciable cost is equal to cost of the asset less .
Under method of depreciation, equal portion of depreciable cost is allocated to each period of the useful life of asset.
The method of depreciation focuses on the actual use of the asset rather than just passage of time.
If the useful life of asset is 20 years, the straight line depreciation rate would be .
method of depreciation assumes that the depreciation is a function of passage of time rather than actual productive use of the asset.
A company uses double declining balance method to compute depreciation on fixed assets. If straight line depreciation rate is 10%, the declining balance rate would be .
The sum of years' digits method assumes that the productivity of asset with the passage of time.
Sum of years’ digits method attempts to charge a depreciation in early years of an asset's useful life.
An asset is purchased on January 1, 2018. The cost of the asset is $150,000 and the useful life is 5 years with no salvage value. The depreciation charge for the first year under sum of years' digits method would be .
An asset is purchased on January 1, 2018. The cost of the asset is $150,000 and the useful life is 15 years with $10,000 salvage value. The estimated productive life of the asset is 20,000 hours. If the asset is used for 2,000 hours during the year 2018, the depreciation charge under activity method for the year 2018 would be .
An asset is purchased on January 1, 2018. The cost of the asset is $150,000 and the useful life is 20 years with $10,000 salvage value. The yearly depreciation charge under straight line method would be .
Accelerated depreciation and sum-of-the-years' digits methods are two forms of .
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