F3 - M5 - PP&E: Depreciation and Disposal

Question 1

______ depreciation is related to an asset’s deterioration and wear over a period of time.

Answer 1

Physical depreciation

Question 2

______ depreciation arises from obsolescence or inadequacy of the asset to perform efficiently.

Answer 2

Functional depreciation

Question 3

Under the ________ depreciation method, separate significant components of a fixed asset with different lives should be recorded and depreciated separately.

Answer 3

component

Question 4

Under component deprecation, The carrying amount of parts or components that are replaced should be ______________.

Answer 4

derecognized

Question 5

IFRS requires __________ depreciation.

Answer 5

component depreciation

Question 6

The ___________ methods depreciate an entire class of assets over a single life.

Answer 6

composite and group depreciation

Question 7

__________ allows component depreciation and composite/group depreciation.

Answer 7

U.S. GAAP

Question 8

What are the 3 major methods of deprecation

Answer 8

1) The straight-line, 2) sum-of-the-years’ digits, and 3) declining balance methods

Question 9

Under _______, the depreciation method used should match the expected pattern of fixed asset consumption.

Answer 9

IFRS,

Question 10

The ______________ method is similar to the straight-line method except that the life is defined in number of units expected to be produced.

Answer 10

units-of-production

Question 11

_________ is similar to the units-of-production method, except the former is applied to “wasting” assets.

Answer 11

Depletion

Question 12

What is the formula for straight line depreciation

Answer 12

Fixed Asset Cost - Salvage Cost / Estimated Life

Question 13

_______ is an estimate of the amount the realized at the end of the useful life of a depreciable asset

Answer 13

Salvage Value

Question 14

_______ is the period of time over which an assets costs will be deprecated.

Answer 14

Estimated Useful life

Question 15

What is the calculation for Sum of Years Digits deprecation

Answer 15

Derepcation expense = Cost - Salvage cost X Remaining life of Asset/ Sum of Years digits

Question 16

How to calculate the sum of years

Answer 16

1+2+3+4+5 or (X+(X+1)/2

Question 17

________ method is one of the accelerated methods of deprecation that provides higher deprecation expense in the earlier years and lower charges in the later years

Answer 17

Sum of Years-digit deprecation