Which of the statements is incorrect concerning the depreciation methods? a) Under the output method, the cost per unit of production is constant. b) The straight-line method is particularly appropriate where the asset is expected to decline in usefulness as a function of time and the expected use pattern of the asset is fairly constant over time. c) The sum of the years' digits method provides for a decreasing depreciation charge. d) First-year depreciation under the double declining balance method is computed as the depreciable amount multiplied by double the straight-line rate. e) None of the choices is incorrect 2. All of the following statements are true, except:
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
1. Which of the statements is incorrect concerning the depreciation methods?
a) Under the output method, the cost per unit of production is constant.
b) The straight-line method is particularly appropriate where the asset is expected to decline in usefulness as a function of time and the expected use pattern of the asset is fairly constant over time.
c) The sum of the years' digits method provides for a decreasing depreciation charge.
d) First-year depreciation under the double declining balance method is computed as the depreciable amount multiplied by double the straight-line rate.
e) None of the choices is incorrect
2. All of the following statements are true, except:
a) Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident
b) When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered
c) Donation of PPE should be recorded at the fair value of the donated asset
d) When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values.
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