F3/M5 Depreciation and Disposal

Question 1

(T/F): IFRS requires the depreciation method to reflect the actual consumption of the asset

Answer 1

True, like the flow of inventory they don’t allow LIFO

Question 2

(T/F): IFRS requires component depreciation, permitted by GAAP

Answer 2

True

Question 3

Composite or Group Depreciation

Answer 3

The process of averaging the economic lives of a group of property units and depreciating the entire class of assets over a single life

NO G/L is recorded when an asset of the group is sold

Question 4

(T/F): In the Declining Balance Depreciation method, the salvage value is ignored in the calculation.

Answer 4

True;
No allowance is made for the salvage value because this method always leaves a remaining balance. Use the Net Book Value Remaining to calculate depreciation

Question 5

(T/F): When depreciation is taken individually, a gain or loss is recognized

Answer 5

True, only if there is a group then no G/L is recognized

Question 6

(T/F): % Depletion is not GAAP, Cost Depletion is

Answer 6

True