Chapter 29: DepreciationStraight line and variable method

Question 1

Are normally usable for a number of years after which the asset have relatively little value

Answer 1

PPE

Question 2

The difference when the original cost of an item of PPE and any remaining value when it is retired is an ______

Answer 2

Expense

Question 3

Depreciation period

Answer 3

It begins when it is available for use

Question 4

Depreciation ceases when it is

Answer 4

derecognized

Question 5

Depreciation ceases when it is

Answer 5

derecognized

Question 6

Depreciation does not cease when the asset becomes

Answer 6

Idle temporarily

Question 7

Kinds of Depreciation

Answer 7

1. Physical depreciation
2. Functional or economic depreciation

Question 8

Is related to depreciable asset’s wear and tear and deterioration over a period.

Answer 8

Physical Depreciation

Question 9

Arises from inadequacy, supersession, and obsolescence.

Answer 9

Functional or economic depreciation

Question 10

Arises when the asset is no longer useful because of an increase in the volume operations.

Answer 10

Inadequacy

Question 11

Arises when a new asset becomes available and the new asset can perform the same function more efficiently and economically or for substantially less cost.

Answer 11

Superseesion

Question 12

Is the catchall for economic or functional depreciation.

Answer 12

Obsolescence

Question 13

Factors of Depreciation

Answer 13

1. Depreciable amount
2. Residual value
3. Useful life

Question 14

IS the costy of an asset or other amount substitued for cost, less the residual value.

Answer 14

Depreciable amount

Question 15

Is the estimated net amount currently obtainable of the asset is at the end of the useful life.

Answer 15

Residual Value

Question 16

Is either the period over which an asset is expected to be available for use or the number of production units xpected to be obtained from the asset.

Answer 16

Useful Life

Question 17

Factors in determining useful life

Answer 17

1. Expected usage of the asset
2. Expected physical wear and tear
3. Technical or commercial obsolescence
4. Leal limits

Question 18

Depreciation method

Answer 18

1. Equal or uniform charge methods
2. Variable charge or use-factor or activity methods
3. Decreasing charge or accelerated or diminishing balance
4. Other methods

Question 19

The annual depreciation charge is calculate by allocating the depreciable amount equally over the number of years of stimated useful life.

Answer 19

Straight line method

Question 20

Assets that are dissimilar in nature are grouped and treated as a single unit.

Answer 20

Composite method

Question 21

All assets that are similar in nature are grouped and treated as a single unit.

Answer 21

Group Method

Question 22

Assumes that depreciatio is more a function a use srather than passage of time.

Answer 22

Variable or activity methods

Question 23

Two Variable methods

Answer 23

1. Working hours method
2. Output or production method

Question 24

A depretion rate is computed by dividing the depreciable amount by the estimated useful life in terms of service hours.

Answer 24

Working hours method

Question 25

Results in a charge based on the expected use or output. A depretion rate is computed by dividing the depreciable amount by the estimated useful life in terms of units of output.

Answer 25

Output or production method