Which of the following depreciation methods best fits those assets that tend to wear out before they become obsolete?

Which of the following depreciation methods best fits those assets that tend to wear out before they become obsolete?

Which of the following depreciation methods best fits those
assets that tend to wear out before they become obsolete?

A) Straight-line
method

B) Depletion
method

C) Double-declining-balance
method

D) Units-of-production
method

7.2-17 Double-declining balance depreciation:

A) is an
accelerated method of depreciation.

B) ignores
the residual value in computing depreciation, except during the last year.

C) is based
on book value.

D) is all of
the above.

Which of the following depreciation methods best applies to those assets that
generate greater revenue earlier in their useful lives?

A) Straight-line
method

B) Depletion
method

C) Double-declining-balance
method

D) Units-of-production
method

7.2-19 A depreciation method that writes
off a relatively larger amount of the asset’s cost nearer the start of its
useful life than the straight-line method is the:

A) units-of-production
method.

B) straight-line
method.

C) accelerated
depreciation method.

D) estimated
residual value method.

7.2-20 A depreciation method in which an
equal amount of depreciation expense is assigned to each year of the asset’s
use is the:

A) units-of-production
method.

B) straight-line
method.

C) accelerated
depreciation method.

D) estimated
residual value method.

Which of the
following statements is FALSE?

A) Assets
that are increasing in value are still subject to depreciation.

B) Depreciation
is a non-cash expense.

C) Accumulated
depreciation represents a growing amount of cash to be used to replace the
existing asset.

D) Accumulated
depreciation is that portion of a plant asset’s cost that has been recorded
previously as an expense.

7.2-22 Which of the following statements is FALSE?

A) As an asset
is used in operations, accumulated depreciation increases.

B) As an
asset is used in operations, the book value of the asset decreases.

C) As an
asset is used in operations, the book value of the asset increases.

D) An asset’s
final book value is its residual value.

7.2-23 When computing depreciation for a plant
asset, which of the following must be estimated?

A) Useful
life and residual value

B) Residual
value and current market value

C) Useful
life and current market value

D) Useful
life, current market value, and residual value

The expected cash
value of a plant asset at the end of its useful life is known as:

A) scrap
value.

B) salvage
value.

C) residual
value.

D) any of the
above.

7.2-25 The depreciable cost of an asset using
straight line depreciation is defined as:

A) cost minus
accumulated depreciation.

B) cost minus
salvage value.

C) current
sales value minus historical cost.

D) cost minus
annual maintenance expense.


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