WESTERN GOVERNORS UNIVERSITY · COLLEGE OF BUSINESS
WGU D104 Units 4-6
Practice Question Bank
Comprehensive Review — Intermediate Accounting II
Topics: Depreciation, Impairment, Depletion, Current Liabilities, Contingencies
& Ratios
Edition 1 · September 2026
Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales — Units 4-6 2
WGU D104 · Western Governors University Page 1
,WGU D104 UNITS 4-6 PRACTICE GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
This comprehensive review contains 105 practice questions covering Units 4-6 of WGU D104:
Intermediate Accounting II. Each question includes four answer choices, a clearly marked
correct answer, and a detailed rationale explaining the concept, calculations, and accounting
treatment.
Category: Intermediate Accounting II — Depreciation, Impairment,
Liabilities & Contingencies
1 A major exception exists when a company will pay a currently maturing obligation
from assets classified as long-term.
A True
B False
C Only if approved by the board
D Only for government entities
Why A is correct: A major exception exists when a company will pay a currently maturing
obligation from assets classified as long-term. This is an exception to the normal current
liability classification.
B — This is true; there is an exception.
C — Board approval is not the determining factor.
D — This applies to all companies, not just government.
,2 Current liabilities are usually recorded and reported in financial statements at their
full:
A Maturity value
B Present value
C Book value
D Fair value
Why A is correct: Current liabilities are usually recorded and reported in financial
statements at their full maturity value, not discounted to present value.
B — Present value is used for long-term liabilities.
C — Book value is not the primary measurement.
D — Fair value is not typically used for current liabilities.
3 The Group Method of depreciation:
A Depreciates heterogeneous assets with different lives
B Depreciates a collection of assets that are similar in nature
C Uses different depreciation rates for each asset
D Is not allowed under GAAP
Why B is correct: The group method depreciates a collection of assets that are similar in
nature and have relatively the same useful life.
A — This describes the composite approach.
C — The group method uses one rate for the group.
D — The group method is allowed under GAAP.
, 4 When do companies use the group method of depreciation?
A When assets are similar and have relatively the same useful life
B When assets are heterogeneous and have different lives
C Only for tax purposes
D Only for regulated industries
Why A is correct: Companies use the group method when assets are similar and have
relatively the same useful life.
B — This describes the composite approach.
C — The group method is used for financial reporting.
D — It is not limited to regulated industries.
5 The Composite approach to depreciation:
A Depreciates a collection of assets that are similar in nature
B Depreciates a collection of assets that are heterogeneous and have different lives
C Uses the same useful life for all assets
D Is also called the straight-line method
Why B is correct: The composite approach depreciates a collection of assets that are
heterogeneous and have different lives.
A — This describes the group method.
C — The composite approach accounts for different lives.
D — This is a different method.
WGU D104 Units 4-6
Practice Question Bank
Comprehensive Review — Intermediate Accounting II
Topics: Depreciation, Impairment, Depletion, Current Liabilities, Contingencies
& Ratios
Edition 1 · September 2026
Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales — Units 4-6 2
WGU D104 · Western Governors University Page 1
,WGU D104 UNITS 4-6 PRACTICE GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
This comprehensive review contains 105 practice questions covering Units 4-6 of WGU D104:
Intermediate Accounting II. Each question includes four answer choices, a clearly marked
correct answer, and a detailed rationale explaining the concept, calculations, and accounting
treatment.
Category: Intermediate Accounting II — Depreciation, Impairment,
Liabilities & Contingencies
1 A major exception exists when a company will pay a currently maturing obligation
from assets classified as long-term.
A True
B False
C Only if approved by the board
D Only for government entities
Why A is correct: A major exception exists when a company will pay a currently maturing
obligation from assets classified as long-term. This is an exception to the normal current
liability classification.
B — This is true; there is an exception.
C — Board approval is not the determining factor.
D — This applies to all companies, not just government.
,2 Current liabilities are usually recorded and reported in financial statements at their
full:
A Maturity value
B Present value
C Book value
D Fair value
Why A is correct: Current liabilities are usually recorded and reported in financial
statements at their full maturity value, not discounted to present value.
B — Present value is used for long-term liabilities.
C — Book value is not the primary measurement.
D — Fair value is not typically used for current liabilities.
3 The Group Method of depreciation:
A Depreciates heterogeneous assets with different lives
B Depreciates a collection of assets that are similar in nature
C Uses different depreciation rates for each asset
D Is not allowed under GAAP
Why B is correct: The group method depreciates a collection of assets that are similar in
nature and have relatively the same useful life.
A — This describes the composite approach.
C — The group method uses one rate for the group.
D — The group method is allowed under GAAP.
, 4 When do companies use the group method of depreciation?
A When assets are similar and have relatively the same useful life
B When assets are heterogeneous and have different lives
C Only for tax purposes
D Only for regulated industries
Why A is correct: Companies use the group method when assets are similar and have
relatively the same useful life.
B — This describes the composite approach.
C — The group method is used for financial reporting.
D — It is not limited to regulated industries.
5 The Composite approach to depreciation:
A Depreciates a collection of assets that are similar in nature
B Depreciates a collection of assets that are heterogeneous and have different lives
C Uses the same useful life for all assets
D Is also called the straight-line method
Why B is correct: The composite approach depreciates a collection of assets that are
heterogeneous and have different lives.
A — This describes the group method.
C — The composite approach accounts for different lives.
D — This is a different method.
