Bookkeeping 33. Dep

Question 1

1. What are the methods for DEPRECIATION?

Answer 1

1. Straight Line Method
2. Sum Of The Years Digits
3. Double Declining Balance
4. Units of Production

Question 2

2. What is ACCELERATED DEPRECIATION?

Answer 2

The greatest portion of the expense is taken on the first year, with SUCCESSIVELY smaller amounts being taken on later years.

Question 3

3. Which methods yield ACCELERATED DEPRECIATION?

Answer 3

a. SUM OF THE YEARS DIGITS

b. DOUBLE DECLINING BALANCE

Question 4

4. What is the SALVAGE VALUE of Plant Assets?

Answer 4

The TRADE IN VALUE or ESTIMATED SELLING PRICE at the end of its useful life.

Question 5

5. How do you compute the STRAIGHT LINE DEPRECIATION for a plant asset?

Answer 5

The SALVAGE VALUE is deducted from the COST, and the remaining amount is divided by the ESTIMATED USEFUL LIFE of the asset.

Question 6

6. SUM OF THE YEARS DIGITS METHOD employs a fraction in which the NUMERATOR and DENOMINATOR consist of:

Answer 6

NUMERATOR: the remaining years of the expected lifetime
DENOMINATOR: the sum of all the years of the asset’s life.

Question 7

7. For an asset expected to last five years, the DENOMINATOR would be:

Answer 7

5+4+3+2+1 = 15.

In the first year, you would have depreciation expense of 5/15ths of the cost (less the SALVAGE VALUE).

Question 8

8. Depreciation under the SUM OF THE YEARS DIGITS for an asset expected to last 5 years would be calculated:

Answer 8

1. 5/15th x depreciable cost
2. 4/15th x depreciable cost
3. 3/15th
4. 2/15th
5. 1/15th