Depreciation Straight Line Method Pdf

A principal objection to the straight-line method of depreciation is that it:

Daftar Isi

1. A principal objection to the straight-line method of depreciation is that it:

Answer:

assumes that the asset's economic usefulness is the same each year.

2. If there is a change from the sum of years digits method to the straight-line method of depreciation

Answer:

To calculate depreciation using a straight line basis, simply divide net price (purchase price less the salvage price) by the number of useful years of life the asset ha

Compared to the straight-line depreciation method, the sum-of-the-years'-digits method results in greater depreciation in the earlier years of an asset's useful life and less in the later years. ... In other words, the difference is in the timing of when the same total amount of depreciation will be reported.

3. Which of the following is the assumption on which straight-line method of depreciation is based?

Answer:

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4. The cumulative effect of a change from double-declining-balance to straight-line depreciation is properly reported on the income statement immediately before net income (loss).

Answer:

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5. 1. A desktop computer was purchased by XYZ Merchandising Company amounting to PHP25,000 last July 1, 2019. The computer is estimated to have a useful life 5 years. The straight-line method was used to compute the depreciation. The bookkeeper made this entry last December 31, 2019:Depreciation expense 5,000Accumulated depreciation – computer 5,000What is the adjusting entry at the end of the calendar year December 31, 2019?A. Accumulated Depreciation – computer 2,500Depreciation Expense 2,500B. Accumulated Depreciation – computer 5,000Depreciation Expense 5,000C. Depreciation expense 5,000Accumulated Depreciation – computer 5,000D. Depreciation expense 2,500

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6. An engineer bought equipment for p500,000. he spent an additional amount of p30,000 for installment and other expenses. the estimated useful life of the equipment is 10 years. the salvage value x% of the first cost. using straight line method of depreciation, the book value at the end of 5 years will be p291,500. what is the value of x?

Answer:

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7. On january 1, 2020, bbb company purchased a machine for p1,400,000. the machine has a 5-year useful life, a residual value of p200,000, and is depreciated using the straight line method for financial statement purposes. for tax purposes. depreciation was p500,000 for 2020 and p400,000 for 2021. bbb company's income before tax and depreciation was p2,000,000 and its tax rate was 30%. bbb company made estimated tax payment of p200,000 during 2021. what is the income tax payable on december 31, 2021

Answer:

On january 1, 2020, bbb company purchased a machine for p1,400,000. the machine has a 5-year useful life, a residual value of p200,000, and is depreciated using the straight line method for financial statement purposes. for tax purposes. depreciation was p500,000 for 2020 and p400,000 for 2021. bbb company's income before tax and depreciation was p2,000,000 and its tax rate was 30%. bbb company made estimated tax payment of p200,000 during 2021. what is the income tax payable on december 31, 2021

8. Altoona company is considering replacing a machine with a book value of $200,000, a remaining useful life of 4 years, and annual straight-line depreciation of $50,000. the existing machine has a current market value of $175,000. the replacement machine would cost $320,000, have a 4 year life, and save $100,000 per year in cash operating costs. if the replacement machine would be depreciated using the straight-line method and the tax rate is 40%, what would be the increase in annual income taxes if the company replaces the machine

Answer:

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Explanation:

9. Peavey enterprises purchased a depreciable asset for $24,000 on april 1, year 1. the asset will be depreciated using the straight-line method over its four-year useful life. assuming the asset's salvage value is $2,400, peavey enterprises should recognize depreciation expense in year 2 in the amount of:

Depreciation is the gradual decease of an asset's value over the duration of its useful life. It is essential in the accounting and taxation processes, i.e. the asset's current market value.

Depreciation expense formula

Depreciation expense under straight line method is:
[tex]Depreciation Expense = \frac{Depreciable amount}{Useful Life in years} [/tex]

Depreciable amount is the difference between the purchase cost and its scrap value. Scrap value is the asset's value at the end of its useful life.
[tex]Depreciable Amount = Purchase cost - Scrap value[/tex]

Combining the two we will arrive with the new formula:
[tex]Depreciation Expense = \frac{Purchase cost - Scrap value}{Useful Life in years} [/tex]

Now, we'll deal with the computation.

[tex]Depreciation Expense = \frac{Purchase cost - Scrap value}{Useful Life in years} [/tex]
[tex]Depreciation Expense = \frac{24000 - 2400}{4}[/tex]
[tex]Depreciation Expense = \frac{21600}{4}[/tex]
[tex]Depreciation Expense = 5400 [/tex]

This means that every year, the asset will depreciate by $5,400. So in year 2, the asset will have a depreciation expense of $5,400!

That would be the answer. Keep practicing and researching to improve. God bless!