Ch 112

Ch 112 - 10/26/2009 Chapter 11: Depreciation, Impairments,...

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0% (0 out of 21 correct) Responses to questions are indicated by the symbol. 1. Depreciation is a means of determining an asset's value. A. True B. False Depreciation is a means of cost allocation not valuation. 2. Total depreciation over an asset's life cannot exceed an amount equal to cost minus estimated salvage value. A. True B. False Depreciation cannot exceed an asset's depreciable base which is cost less estimated salvage value. 3. Changes in the estimates used to calculate depreciation should be handled as a correction of an error. A. True B. False A change in estimate is not the same as a correction of an error. Such changes are used to change the depreciation charge in the current and prospective periods. 4. Impairment has occurred when the expected future net cash flows (undiscounted) are less than the carrying amount of an asset. A. True B. False Impairment occurs when the carrying amount of an asset is not recoverable. 10/26/2009 Chapter 11: Depreciation, Impairments, … higheredbcs.wiley.com/…/ch11.html 1/6
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5. Depletion is normally calculated using the straight-line method. A. True B. False Depletion is normally calculated using the units of production method. 6. Obsolescence is the replacement of one asset with another more efficient and economical asset. A. True B. False The replacement of one asset with another more efficient and economical asset is termed supersession. 7. The major limitation of the straight-line method is that it is inappropriate in situations in which depreciation is a function of time instead of activity. A.
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This note was uploaded on 02/22/2010 for the course ACG 6200 taught by Professor Lorenzo during the Spring '10 term at FIU.

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Ch 112 - 10/26/2009 Chapter 11: Depreciation, Impairments,...

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