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- What element must be present when determining if an asset is a depreciating asset? a. An asset that holds its value for a period of time or increases in value for a period. b. An asset that has a limited effective life. c. A fixture that completely loses its value. d. An asset that cannot reasonably be expected to decline in value over time.Depreciation does not measure the decline in market value of an asset each period. True FalseDepreciation is a process that involves: a. Increasing the value of assets b. Distributing the cost of an asset over its useful life c. Eliminating the need for financial statements d. Reducing the value of liabilities
- Which of the following statements is the assumption on which straight line depreciation is based? Service value declines as a function of time rather than use Physical wear and tear are more important than economic obsolescence Service value declines as function of obsolescence rather than time The operating efficiency of the asset decrease in later yearsDepreciation occurs as a result of: A. Wear and tearB. Decrease in the value of assetsC. Increase in the value of liabilityD. Decrease in capitalWhich statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.
- 4. The most appropriate definition of depreciation is: A. A means of determining the decrease in the market value of an asset over time B. A means of allocating the cost of an asset over a number of accounting periods C. A means of setting funds aside for the replacement of the asset D. A means of estimating the current value of the assetIt is the gradual diminution of the useful value of tangible property resulting from wear and tear and normal obsolescence. It is also applied to the amortization of intangible assets the use of which in the trade or business is definitely limited in duration. Group of answer choices Depreciation Depletion Obsolescence Bad debtsIt results not from a deterioration in the asset's ability to serve its intended purpose, but from a change in the demand for the services it can render. O physical depreciation functional depreciation O technological depreciation monetary depreciation
- Functional factors of depreciation include a. Obsolescence b. Wear and tear c. Usage of the asset d. Passage of timeThe write-off of the cost of plant and equipment is called a.amortization. b.depletion. c.depreciation. d.deteriorationWhich of the following is true regarding special issues in accounting for long-term assets?A. An asset’s useful life can never be changed.B. An asset’s salvage value can never be changed.C. Depreciation expense calculations may need to be updated using new and more accurate estimates.D. Asset values are never reduced in value due to physical deterioration.