Intermediate Accounting Exam 2 Review Questions With Correct Answers

Intermediate Accounting Exam 2 Review Questions With Correct Answers Depreciation is not a matter of valuation - answerIt is a process of cost allocation. Book value = - answerCarrying Value = Historical (original) cost - Accumulated depreciation What does the balance sheet show for the value of a depreciable asset? - answerBook value What are the types of depreciation? - answer1.) Straight-line Method 2.) Accelerated Depreciation 3.) Double Declining-Balance Method 4.) Sum-of-the-years'-digits Method 5.) Units-of-output Method 6.) Working hours Method What method is used for financial statements? - answerStraight-Line Method What method is used for taxes? - answerMACRS Formula for SL Method depreciation expense: - answer(Historical cost - Estimated Salvage Value) / Estimated useful life What method shows larger amounts of depreciation recognized is the earlier years with reduced amounts later? - answerAccelerated Depreciation More depreciation expense in the early years means... - answerLess net income and less taxes. Should methods for reporting depreciation on financial reporting and taxes be the same? - answerNo Formula for DDB Method depreciation expense: (Current year) - answer[SL rate X 2] X (Cost) X (months left / 12)