F3M6

Question 1

How do you know when to depreciate versus amortize

Answer 1

tangible - depreciate

intangible - amortize

Question 2

Component depreciation

Answer 2

separate depreciation of each significant part

Question 3

Composite/group depreciation

Answer 3

averaging the economic life of the number of PPE (yearly dep/total dep)

Question 4

Disposal of group asset

Answer 4

use a/d as plug

Question 5

Straight Line Depreciation

Answer 5

service potential declines with time

Question 6

Depreciable base st

Answer 6

cost - salvage value

Question 7

Sum of years depreciation

Answer 7

accelerated method

Front end loaded

add up all years for denom

num is # of years left

Question 8

Units of Production Depreciation

Answer 8

converts depreciation to a variable cost

Question 9

declining balance depreciation

Answer 9

rapid obsolesnse

Salvage ignored until the end

2/n

Question 10

Partial Year Depreciation

Answer 10

half year convention

depreciating fully in first year none in last and vice versa all ok

Question 11

disosal of a single depreciable asset

Answer 11

Dr. Cash
Dr. A/D
Cr. Asset
Cr. Gain

Question 12

Writing off asset

Answer 12

Dr. A/D

Cr. Old asset

Question 13

Total and permanent impairment

Answer 13

Dr. A/D
Dr. Loss to impairment
Cr. Asset

Question 14

Depletion is for

Answer 14

natural resources

Question 15

Method of Depletion

Answer 15

cost (GAAP)

Percentage (tax purposes only)

Question 16

What is included in cost of depletion

Answer 16

purchase price, development cost, restoration costs less residual value

Question 17

Calculate Depletion

Answer 17

unit rate * number extracted

Depletion base/estimated recoverable units