WGUl D104l Objectivel Assessmentl V2l –l
Intermediatel Accountingl IIl Guidel (Latestl
2026/l 2027l Update)l 100%l Verifiedl
Questionsl &l Answersl |l Gradel A
Q:l compositel depreciationl ratel formula
Answer:
Totall depreciationl perl yearl forl group
totall costl ofl assetsl forl group
Q:l Thel lengthl ofl timel itl takesl al companyl tol depreciatel itsl assetsl onl al compositel
basisl isl called
Answer:
compositel life
Q:l wherel wouldl youl putl gainl orl lossl ofl anl assetl ifl youl retirel thatl assetl beforel orl
afterl thel averagel servicel lifel ofl thel groupl hasl beenl reached?
Answer:
Accumulatedl depreciation
Q:l whatl isl al goodl thingl aboutl group/compositel method
Answer:
simplifiesl bookkeepingl andl averagesl outl errorsl causedl byl overl orl underdepreciation
,Q:l Advantagesl ofl unitl methodl comparedl tol groupl orl compositel methods?
Answer:
simplifiesl computationl mathematically
identifiesl gainsl andl lossesl onl disposal
isolatesl depreciationl onl idlel equipment
itl representsl thel bestl estimatel ofl thel depreciationl ofl eachl asset,l notl thel resultl ofl
averagingl thel costl overl al longerl periodl ofl time
Q:l GAAPl requiresl thatl thel methodl resultl inl thel allocationl ofl anl asset'sl costl overl thel
asset'sl lifel mustl be
Answer:
systematicl andl rational
Q:l whatl isl al productionl variablel method
Answer:
combinationl ofl SLl andl activityl approach
Q:l inl theory,l whichl depreciationl methodl shouldl bel used?
Answer:
thel methodl thatl bestl matchesl revenuesl withl expenses
Q:l Ifl youl werel anl investor,l whatl wouldl youl wantl al depreciationl methodl tol showl
you?
Answer:
al methodl thatl allowsl visionl ofl costsl withl thel revenuel createdl froml thosel costs.l Thisl
allowsl forl assessingl futurel cashl flowsl froml thel asset.
,Q:l Whyl wouldl al reall estatel companyl wantl al increasing-chargel methodl ofl
depreciation?
Answer:
becausel therel isl lowerl dep.l atl thel beginningl andl higherl dep.l atl thel end.
allowsl forl higherl amountsl ofl totall assetsl andl netl incomel inl thel earlyl years
Q:l Whenl al companyl chosesl tol takel halfl ofl al yearl depreciationl inl bothl thel yearsl ofl
acquisitionl andl thel yearl ofl disposal,l whatl isl thisl called?
Answer:
half-yearl convention
Q:l companiesl normallyl computel depreciationl onl thel basisl ofl the
Answer:
nearestl fulll month
Q:l Depreciationl isl weirdl inl thel factl that
Answer:
itl doesl notl involvel al currentl cashl outflow
Q:l Depreciation,l inl nol way,l provides
Answer:
fundsl forl thel replacementl ofl assets
Q:l wherel dol fundsl forl replacementl ofl assetsl comel from
, Answer:
revenues
Q:l Howl doesl al companyl determinel depreciationl rates?
Answer:
pastl experiencel withl similarl assetsl andl otherl pertinentl information
Q:l Dol youl attemptl tol makel changesl tol previouslyl reportedl resultsl forl depreciation?
Answer:
no
Q:l Changesl forl depreciationl inl subsequentl periodsl arel determinedl byl (assumingl SL)
Answer:
dividingl remainingl BVl -l SVl byl estl Life
Q:l Whatl isl onel wayl tol increasel incomel forl thel year,l besidesl makingl morel money?
Answer:
extendl estl usefull lifel ofl anl asset
Q:l whenl arel assetsl testedl forl impairment
Answer:
wheneverl therel arel factorsl thatl indicatel al potentiall declinel inl thel valuel ofl thel asset
Q:l whatl typel ofl assetsl shouldl bel testedl forl impairmet
Intermediatel Accountingl IIl Guidel (Latestl
2026/l 2027l Update)l 100%l Verifiedl
Questionsl &l Answersl |l Gradel A
Q:l compositel depreciationl ratel formula
Answer:
Totall depreciationl perl yearl forl group
totall costl ofl assetsl forl group
Q:l Thel lengthl ofl timel itl takesl al companyl tol depreciatel itsl assetsl onl al compositel
basisl isl called
Answer:
compositel life
Q:l wherel wouldl youl putl gainl orl lossl ofl anl assetl ifl youl retirel thatl assetl beforel orl
afterl thel averagel servicel lifel ofl thel groupl hasl beenl reached?
Answer:
Accumulatedl depreciation
Q:l whatl isl al goodl thingl aboutl group/compositel method
Answer:
simplifiesl bookkeepingl andl averagesl outl errorsl causedl byl overl orl underdepreciation
,Q:l Advantagesl ofl unitl methodl comparedl tol groupl orl compositel methods?
Answer:
simplifiesl computationl mathematically
identifiesl gainsl andl lossesl onl disposal
isolatesl depreciationl onl idlel equipment
itl representsl thel bestl estimatel ofl thel depreciationl ofl eachl asset,l notl thel resultl ofl
averagingl thel costl overl al longerl periodl ofl time
Q:l GAAPl requiresl thatl thel methodl resultl inl thel allocationl ofl anl asset'sl costl overl thel
asset'sl lifel mustl be
Answer:
systematicl andl rational
Q:l whatl isl al productionl variablel method
Answer:
combinationl ofl SLl andl activityl approach
Q:l inl theory,l whichl depreciationl methodl shouldl bel used?
Answer:
thel methodl thatl bestl matchesl revenuesl withl expenses
Q:l Ifl youl werel anl investor,l whatl wouldl youl wantl al depreciationl methodl tol showl
you?
Answer:
al methodl thatl allowsl visionl ofl costsl withl thel revenuel createdl froml thosel costs.l Thisl
allowsl forl assessingl futurel cashl flowsl froml thel asset.
,Q:l Whyl wouldl al reall estatel companyl wantl al increasing-chargel methodl ofl
depreciation?
Answer:
becausel therel isl lowerl dep.l atl thel beginningl andl higherl dep.l atl thel end.
allowsl forl higherl amountsl ofl totall assetsl andl netl incomel inl thel earlyl years
Q:l Whenl al companyl chosesl tol takel halfl ofl al yearl depreciationl inl bothl thel yearsl ofl
acquisitionl andl thel yearl ofl disposal,l whatl isl thisl called?
Answer:
half-yearl convention
Q:l companiesl normallyl computel depreciationl onl thel basisl ofl the
Answer:
nearestl fulll month
Q:l Depreciationl isl weirdl inl thel factl that
Answer:
itl doesl notl involvel al currentl cashl outflow
Q:l Depreciation,l inl nol way,l provides
Answer:
fundsl forl thel replacementl ofl assets
Q:l wherel dol fundsl forl replacementl ofl assetsl comel from
, Answer:
revenues
Q:l Howl doesl al companyl determinel depreciationl rates?
Answer:
pastl experiencel withl similarl assetsl andl otherl pertinentl information
Q:l Dol youl attemptl tol makel changesl tol previouslyl reportedl resultsl forl depreciation?
Answer:
no
Q:l Changesl forl depreciationl inl subsequentl periodsl arel determinedl byl (assumingl SL)
Answer:
dividingl remainingl BVl -l SVl byl estl Life
Q:l Whatl isl onel wayl tol increasel incomel forl thel year,l besidesl makingl morel money?
Answer:
extendl estl usefull lifel ofl anl asset
Q:l whenl arel assetsl testedl forl impairment
Answer:
wheneverl therel arel factorsl thatl indicatel al potentiall declinel inl thel valuel ofl thel asset
Q:l whatl typel ofl assetsl shouldl bel testedl forl impairmet
