Chapter 28: Depreciation Sum of years' digits...

Question 1

Provide higher depreciation in the earlier years and lower depreciation in the later years

Answer 1

Decreasing charge or accelerated methods

Question 2

is on the philosophy that new assets are generally capable of producing more revenue in the years than in the later years.

Answer 2

Rationale for accelerated depreciation

Question 3

The use of ___________________ is that the cost of using an asset includes not only depreciation but also repairs on such assets.

Answer 3

Decreasing charge method

Question 4

Three Decdreasing charge methods

Answer 4

1. Sum of years’ digits
2. Declining balance
3. Double declining balance

Question 5

Computed by multiplying the depreciable amount by a series of fractions whose numerator is the digit in the useful life of the asset and whose denominator is the sum of the digits in the useful life of the asset.

Answer 5

Sum of years’s digits

Question 6

Is multiplied by the declining carrying amount of the asset in order to arrive at the annual depreciation

Answer 6

Fixed or uniform rate

Question 7

The problem in this method is the determination of the fixed rate to be applied against the diminishing carrying amount.

Answer 7

Declining blance method

Question 8

The straight line rate is simply doubled to get the fixed rate.

Answer 8

Double declining balance method

Question 9

Consists of merely estimating the value of the asset at the end of the period.

Answer 9

Inventory method

Question 10

The amount of depreciation is equal to the original cost of the asset retired minus salvage proceeds.

Answer 10

Retirement method

Question 11

The amount of depreciation is equal to the replacement cost of the asset retired, minus salvage proceeds.

Answer 11

Replacement method