Module 7_ Opening Exercise _ Schoology.pdf

Module 7_ Opening Exercise _ Schoology.pdf - 1/1 Question 1...

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1 /1 0 /1 1 /1 0 /1 1 /1 Question 1 Natural resources are assets that include standing timber, mineral deposits, and oil and gas fields. True False Correct! Natural resources are assets that are physically consumed when used; examples include standing timber, mineral deposits, and oil and gas fields. Since they are consumed when used, they are often called wasting assets. Question 2 Depreciation measures the actual decline in market value of an asset. True False Try again! Depreciation is a method of cost allocation and is not determined by market value, but instead by method used. See the Depreciation section in Chapter 10 of the textbook for more information. Question 3 A company purchased a plant asset for $45,000. The asset has an estimated salvage value of $6,000, and an estimated useful life of 10 years. The annual depreciation expense using the straight-line method is $3,900 per year. True False Correct! Depreciation expense = (cost - salvage value)/estimated useful life. In this example, depreciation
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