Depreciable Assets and Depreciation Flashcards Preview

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Flashcards in Depreciable Assets and Depreciation Deck (12):
1

What is the basic principle of matching revenue and expenses applied to?

Long-lived assets that are not held for sale in the ordinary course of business

2

What are the 2 types of depreciation?

Physical and functional

3

What is the type of depreciation related to an asset's deterioration and wear over a period of time?

Physical depreciation

4

What is the type of depreciation arising from obsolecence or inadequacy of the asset to perform efficiently?

Functional depreciation

5

What is an estimate of the amount that will be realized at the end of the useful life of a depreciable asset?

Salvage value

6

What is an advantage of component depreciation over composite depreciation?

Depreciation expense for the year would be more accurate because each component item would be depreciated over its useful life

7

Is a gain or loss recognized when one asset in a group is retired?

No

8

What is the formula for straight line depreciation?

(Cost - salvage value) / estimated useful life

9

What is the formula for sum-of-the-years'-digits?

(Cost - salvage value) x (remaining life of asset/sum of the years digits)

10

What is the formula for double-declining balance depreciation?

2 x(1/n) x (Cost - Acccumulated depreciation)

11

What is the formula for units-of-production method?

Step 1: (Cost - Salvage value)/Estimated units or hours = Rate per unit or hour, Step 2: Rate per unit(or hour) x # of units produced(or hours worked) = depreciation expense

12

What is the allocation of the cost of wasting natural resources?

Depletion