For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions press or click on the blank space provided.
If you have difficulty answering the following questions, learn more about this topic by reading our Depreciation (Explanation).
Depreciation Expense shown on a company's income statement must be the same amount as the depreciation expense on the company's income tax return.
The purpose of depreciation is to have the balance sheet report the current value of an asset.
Depreciation Expense reflects an allocation of an asset's original cost rather than an allocation based on the economic value that is being consumed.
An asset's useful life is the same as its physical life?
One company might depreciate a new computer over three years while another company might depreciate the same model computer over five years...and both companies are right.
Depreciation Expense is shown on the income statement in order to achieve accounting's matching principle.
Accumulated Depreciation will appear as a deduction within the section of the balance sheet labeled as Property, Plant and Equipment.
If a company continues to use equipment past the useful life that was assumed in determining the depreciation, there will be no Depreciation Expense in those additional years.
A company may depreciate equipment over 10 years on a straight-line basis for its financial statements, but might use an accelerated method of depreciation over a shorter time period on its income tax return?
Depreciation Expense is sometimes referred to as a noncash expense.
Both Land and Land Improvements will generally be depreciated.
Amortization of intangible assets and depletion of natural resources is conceptually similar to depreciation of constructed assets.
Depreciation Expense shown on the financial statements is a precise amount that is continuously refined.
Over the life of an asset subject to depreciation, the accelerated method will result in more Depreciation Expense in total than the total Depreciation Expense using the straight-line method.
Which of the following depreciation methods is NOT an accelerated method?
The book value of an asset is defined as
When a company purchases a 10-acre parcel of land and a building located on the land, the company will depreciate the entire cost over the useful life of the building.
The book value of an asset indicates the asset's fair market value at that time.
If a company revises the estimated useful life of one of its assets being depreciated, the company will need to reissue its earlier financial statements as the earlier depreciation was incorrect.
Want more practice questions?
Receive instant access to our graded Quick Tests (more than 1,800 unique test questions) when you join AccountingCoach PRO.
We now offer nine Certificates of Achievement for Introductory Accounting and Bookkeeping. The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Bank Reconciliation, and Payroll Accounting. Click here to learn more.