Which method almost always produces the most depreciation in the first year? a. Units-of-production b. Straight-line c. Double-declining-balance d. All produce the same total depreciation | Homework.Study.com (2024)

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• 1. Which depreciation method is most commonly used among publicly owned corporations? a. Straight-line b. Double-declining balance c Units-of-output d. All of the various depreciation methods are used
• Depletion can be compared to which of the following depreciation methods? a. units-of-production b. straight-line c. double-declining-balance d. None of these.
• Depletion can be compared to which of the following depreciation methods? a. units-of-production b. double-declining-balance c. straight-line d. none of these choices are correct
• Which of the depreciation methods is called an accelerated depreciation method? A. Straight-line method B. Double-declining-balance method C. Units-of-activity method D. All of these choices are correct.
• Which of the following methods will result in the highest depreciation in the first year? a) Allowance method b) Time valuation method c) Straight-line method d) Declining-balance method
• Which of the following is an example of an accelerated depreciation method? (a) The units of production method (b) The half-year convention method (c) The fixed assets turnover method (d) The double-declining balance method (e) The straight-line method.
• Which method is used to compute depletion? a. Straight-line method b. Double-declining-balance method c. Units-of-production method d. Depletion method
• The most widely used depreciation method is: a. Output units b. Straight line c. Double declining balance d. Others
• Which of the following is not one of the most common depreciation methods? a. Double-declining-balance method b. Sum-of-the-years'-digits method c. Units-of-activity method d. Straight-line method
• Suppose the straight-line depreciation method is used in the first year when the double-declining-balance method should have been used. This error would cause: A. the period's net income to be understated. B. the period's end assets to be understated. C.
• The most widely used depreciation method is: a. double-declining-balance b. straight-line c. other d. units-of-output
• Which of the following are not acceptable amortization methods? a. Units-of-production method. b. Declining-balance method. c. Straight-line method. d. Weighted average method e. None of the above.
• Which depreciation method ignores residual value when computing the depreciable base of an asset? A. Sum-of-the-years'-digits method B. Double-declining-balance method C. Composite method D. Group method
• Given the data below, identify the depreciation method used for each depreciation schedule as one of the following: i. Double declining balance (DDB) depreciation. ii. Sum-of-years'-digits depreciat
• Which of the following statements about the basis is true? a. Depreciation decreases basis. b. Depreciation increases basis. c. Basis is not impacted by depreciation. d. Basis is not impacted by casualty losses.
• A company decides to switch from double-declining balance method to that straight-line method of recording depreciation. What type of change/correlation is this? a.Change in accounting principle. b.Change in reporting entity. c.Change in accounting est
• Compare and contrast straight-line depreciation and MACRS depreciation. Given the choice, would a firm prefer to use straight-line depreciation or MACRS depreciation? Why?
• The method that does not necessarily produce a declining pattern of depreciation over an asset's service life is: a. All of these answer choices produce a declining pattern. b. The sum-of-the-years'-digits method. c. The double-declining-balance method
• Which method would produce an asset value that was the same regardless of whether the environment was inflationary or deflationary? a. FIFO b. LIFO c. weighted average
• A company changes from the accelerated depreciation method to the straight-line depreciation method after reviewing the financial statements of competitors, which disclose their use of the latter method. What primary assumption, principle, or qualitative
• What are the primary causes of depreciation? For each cause, indicate which depreciation method may be most appropriate. Would it be desirable to require all companies to use the same method?
• When using the double-declining balance method, a multiple of which of the following options is utilized? A. Original value. B. Sum-of-the-years -digits. C. Asset output. D. Straight-line rate.
• In what direction will each of the following occurrences shift the investment demand curve, other things being equal: a. an increase in unused production capacity occurs. b. business taxes decline. c. the costs of acquiring equipment fall.
• Which of the following should be the main determinant in the selection of the depreciation method for long-term operational assets? A) The method that best matches the pattern of asset use. B) The method that is most convenient to compute. C) The method t
• Which one of the following capital budgeting decision models consists of dividing the total initial investment outlay by annual after-tax cash inflows (when such inflows are assumed equal over time)? a. Profitability index. b. Payback period. c. Book (acc
• When a company changes from an accelerated method to the straight-line method of depreciation, this change should be handled as a: A. change in accounting estimate B. prior period adjustment C. correction of an error D. change in accounting principle
• What are the three methods of depreciation? Develop a chart using an example of your choice and calculate the depreciation for 4 years. How do the three methods affect the income statement and the balance sheet?
• Acceptable depreciation methods under IFRS include A) Straight-line. B) Accelerated. C) Units-of-production. D) All of the above.
• Which ONE of the following statements about the payback method is true? a. The payback method is consistent with the goal of shareholder wealth maximization b. The payback method represents the number of years it takes a project to recover its initial i
• Which of the following is a capital budgeting method that ignores the time value of money? a. return on assets b. internal rate of return c. net present value d. payback
• Although net-of-tax depreciation gives the same bottom-line result as comprehensive allocation, are there any financial ratios that would be affected by the choice between these methods?
• The units-of-production method is an appropriate depreciation method to use when: a. It is impossible to determine the productivity of the asset. b. The asset's use will be constant over its useful life. c. The productivity of the asset varies significant
• Which of the following is a capital budgeting method, that ignores the time value of money? a. payback b. internal rate of return c. return on assets d. net present value
• Which of the following does not represent an advantage of the unadjusted rate of return over the payback method for evaluating capital projects? (a) The unadjusted rate of return method considers the investment's profitability (b) The unadjusted rate of r
• Think about the different methods of depreciation. What kind of assets do you think each method would be best suited for? Why?
• The alternative depreciation system (ADS) uses which of the following conventions? a) The half-year convention b) The mid-quarter convention c) The mid-month convention d) All of the above
• Under what conditions is the use of the straight-line depreciation method most appropriate?
• The concept similar to depreciation that is applied to natural resources is called: a. depletion b. declining balance c. amortization d. MACRS
• In capital budgeting, what will be the effect on the following if there is an increase in the discount rate? Net Present Value Internal Rate of Return A) Decrease Increase B) Decrease Decrease C) Decrease No Effect D) IncreaseNo Effect E) Increase Increa
• Which of the following methods considers all reciprocal flows between service departments through simultaneous equations? a. Dual method. b. Step method. c. Reciprocal method. d. Direct method. e. The net realizable value method.
• Fill in the blank: A hotel has traditionally depreciated its furniture and equipment using the straight-line method. This year a different depreciation method was used without advising its financial statement readers of this change. As a result, it is vi
• What does a net present value of zero imply? A. The investment is earning a return that exactly matches the required return. B. The investment never pays back its initial cost. C. The investment should be rejected even if the discount rate is lowered.
• Distinguish between the terms allowed depreciation and allowable depreciation. What effects do allowed depreciation and allowable depreciation have on an adjusted basis?
• Which of the following is a legitimate disadvantage of residual income? a. It does not explicitly capture cost of capital in the computation of the measure. b. It does not encourage managers to acce
• Which accounting assumption, principle, or constraint is the rationale for why depreciation is recorded in the accounts over the life of an asset? a. Economic entity assumption b. Going concern assumption c. Monetary unit assumption d. Time period assumpt
• Depreciation is an important source of working capital. Do you agree? Defend your answer.
• (a) Is the management able to influence the amount of depreciation and amortization? (b) What are the motivations behind the possible manipulation of depreciation?
• Compare and contrast the equity method, the initial value method, and the partial equity method for internal investment accounting. What are the differences? How do those differences affect reporting of the investment and income account?
• "She deferred the current year depreciation of $49,000 to the following year in order to present in higher profit." What is the violation in the scenario above?
• Which of the following factors is not included in the analysis of capital investment? a. Lowest acceptable rate of return on the investment. b. Impact of income taxes. c.Sunk cost of the old equipment. d. Economic life of the project.
• Compare and contrast the Equity Method, Initial Value Method, and the Partial Equity Method. What are the differences and how do those differences affect reporting of the investment and income account?
• Which is not a GAAP for investment securities? A. Equity Method B. Consolidation C. Market Value Method D. Replacement Value Method
• Choose the style of expensing that best describes the the given: Goodwill. a. Depreciation b. Amortization c. Depletion d. None of the above
• Which of the following statements is CORRECT? a. The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. b. The payback method is generally regarded by academic
• Which of the following statements comparing ROI and residual income is correct? a. ROI is more useful as a performance measure for a single investment center. b. ROI and residual income are equally good performance measures for a single investment center.
• Which of the following statements is correct regarding the payback method as a capital budgeting technique? a. The payback method considers the time value of money. b. An advantage of the payback method is that it indicates if an investment will be profit
• The most commonly term used when natural resources decrease in value as a result of use is known as: a. depletion b. amortization c. depreciation d. contra asset
• How will increases in the following items affect return on investment (ROI)? Expenses - Inventory a. decrease - decrease b. decrease - increase c. increase - decrease d. increase - increase
• Which one of the following statements is not a disadvantage of the group and composite methods of depreciation? a.Faulty estimates are concealed for long periods. b.Gains are deferred beyond the period in which they actually occurred. c.Recordkeeping i
• Which one of the following statements is not a disadvantage of the group and composite methods of depreciation? a. faulty estimates are concealed for long periods b. gains are deferred beyond the period in which they actually occurred c. recordkeeping is
• Which of the following is consistent with the trade-off theory of capital structure? A. The cost of capital continuously decreases as the firm's debt ratio increases B. The cost of capital remains constant as the firm's debt ratio increases C. The cost of
• Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? a. Amount of loss is reasonably estimable and event occurs infrequently. b. Amount of loss is reasonably esti
• Which type of analysis would reveal a sales increase of $5000 from Year 1 to Year 2? A. Capital B. Horizontal C. Profitability D. Vertical
• Choose the style of expensing that best describes the the given: Land (the factory is built on the land). a. Depreciation b. Amortization c. Depletion d. None of the above
• Which of the following is not an advantage of the average rate of return method? a. It includes the amount of income earned over the entire life of the proposal. b. It emphasizes accounting income. c. It is easy to use. d. It takes into consideration
• Which of the following statements is most correct? a. The slope of the security market line is beta. b. A stock with a negative beta must have a negative required rate of return. c. If a stock's beta doubles its required rate of return must double. d. If
• Under what conditions is it appropriate for a business to use the composite method of depreciation for its plant assets? What are the advantages and disadvantages of this method?
• Which of the following statements concerning payback analysis is true? a. If all other variables are the same, an investment with a shorter payback period is preferable to an investment with a longer payback period. b. The payback method ignores the tim
• Which of the following statements is correct regarding the payback method as a capital budgeting technique? (a) The payback method considers the time value of money (b) An advantage of the payback method is that it indicates if an investment will be profi
• Which of the following assumes zero (0) is the net present value? A. Payback B. Discounted Payback C. Internal Rate of Return D. None of the above.
• The law of diminishing returns indicates that: a)As extra units of a variable resource are added to a fixed resource the marginal product will decline beyond some point. b)Because of economies and diseconomies of scale, a competitive firm's long-run ave
• Which of the following is not a characteristic of the payback method for making capital budgeting decisions? a. It is easy to calculate and comprehend. b. It focuses primarily on liquidity, rather than profitability of an investment project. c. It can be
• Which of the following is not an effective way of dealing with a production constraint (i.e., bottleneck)? a. Reduce the number of defective units produced at the bottleneck. b. Pay overtime to workers assigned to the bottleneck. c. Pay overtime to wor
• Depreciation and amortization policies are justifiable and appropriate only if we assume some permanence to the company because of the: a. periodicity assumption. b. economic entity assumption. c. monetary unit assumption. d. going concern assumption.
• If you were the manager of a division of a company, operating in an inflationary environment, and your bonus depended on net income, which inventory method would you prefer? In answering this question, assume that you are concerned only about receiving a
• Under what conditions is the use of the double-declining-balance depreciation method most appropriate?
• Discuss in what sense is a reinvestment rate assumption embodied in the NPV, IRR, and MIRR methods. What is the assumed reinvestment rate of each method?
• Which of the following statements is correct? a. The market value of a bond will always approach its par value as its maturity date approaches. This holds true even if the firm has filed for bankruptcy. b. On an expected yield basis, the expected capital
• Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? a. Amount of loss is reasonably estimable and an event occurs infrequently. b. Amount of loss is reasonably
• Which of the following is(are) NOT used in calculating sales mix variances for two products that are close substitutes? O The budgeted sales mix percentages O The actual sales mix percentages O The actual total units of the two products sold O The mark
• Consider a Country operating according to the Solow model with production function: Y = K ^1/2 * L^1/2 . Assume that the saving rate is 0.3 (30%), the depreciation rate of capital is 0.09 (9%) and the
• Which consolidation methods can be used under IFRS? a. proportionate consolidation method and parent company method b. fair value enterprise method and parent company method c. fair value enterprise method and identifiable net assets method d. parent comp
• Which of the following statements regarding the contribution approach and the traditional approach is correct? a. The contribution income statement provides a gross margin. b. The traditional income statement provides a contribution margin. c. Both sta
• Compute the deprecation for 2009 and 2010 using the straight-line method.
• What accounting concept justifies the usage of depreciation and amortization policies? A) Going concern assumption B) Fair value principle C) Full disclosure principle D) Monetary unit assumption
• Which of the following pairs of terms do not match? A. Participation budget, bottom-up approach B. Life-cycle budgeting, input/output approach C. Continuous budgeting, perpetual budgeting D. Budge
• As part of the year-end accounting processing review of operating policies, Cullen Co. is considering a change in accounting for its equipment from the straight-line method to an accelerated method. Y
• Which of the following statements does not apply to the market model? A) It is a simpler approach than the standard version of the capital asset pricing model. B) This approach is seldom used in accounting research. C) In this model, the risk-free return
• Which of the following techniques uses time value of money concepts? a) payback method b) internal rate of return c) accounting rate of return d) relative sales value method
• In the simple model of multiple deposit creation in which banks do not hold excess reserves, the increase in checkable deposits equals the product of the change in excess reserves and the: A) reciprocal of the excess reserve ratio. B) simple deposit exp
• When would a company use double decline over the straight line?
• Which of the following is not a likely indicator of possible asset impairment? A. Double the number of asset purchases over the prior year. B. A decrease in the asset's market value. C. External competitive factors. D. Evidence of obsolescence.
• Choose the correct option among the alternatives provided in the following questions: 1) How can you covert COGS under LIFO to COGS under FIFO A. Add the change in the LIFO reserve to COGS under LIF
• Which of the following does not properly describe the depreciation process? a. It is an allocation process. b. It is consistent with the matching principle. c. It involves the use of estimates. d. It attempts to determine an asset's market value.
• Impairment losses may be reversed under: | |GAAP | IFRS |a. |Yes |Yes |b.|Yes | No |c.|No |Yes |d.|No | No
• Choose the style of expensing that best describes the the given: Purchased patent. a. Depreciation b. Amortization c. Depletion d. None of the above
• Choose the style of expensing that best describes the the given: Research and development costs. a. Depreciation b. Amortization c. Depletion d. None of the above
• Which of the following is not treated as a change in accounting principle? a. A change from completed-contract to percentage-of-completion b. A change from LIFO to FIFO for inventory valuation c. A ch
• Identify the choice that best completes the statement or answers the question: 2. Which of the following is a unit-level activity? a. Redesigning the process. b. Setting up the production process. c. Purchase of raw materials. d. Insuring the factor
• Which of the following statements is correct regarding impairment testing and impairment losses? a. The other asset group should be tested for an impairment loss before goodwill is tested. b. Impairment testing may be conducted concurrently for the othe