Q1. In the first year of an asset’s useful life, the DDB depreciation method reports:
a. Depreciation expense that is (_____________/ lower) than the SL depreciation method.
b. Net income that is (higher / _____________) than the SL depreciation method.
c. Accumulated depreciation that is (_____________/ lower) than the SL depreciation method.
d. Total assets that are (higher / _____________) than the SL depreciation method.
Q2. In the final year of an asset’s useful life, the DDB depreciation method reports:
a. Depreciation expense that is (higher / equal / _____________) than the SL depreciation method.
b. Net income that is (_____________/ equal / lower) than the SL depreciation method.
c. Accumulated depreciation that is (higher / _____________/ lower) than the SL depreciation method.
d. Total assets that are (higher / _____________/ lower) than the SL depreciation method.
Q3. Book value (_____________/ does not) depend on the depreciation method used.
Q4. Book value (is / _____________) the same as the current selling price of the asset.
Q5. If an asset has an acquisition cost of $20,000, accumulated depreciation of $10,000, and no residual value, then on average, the assets are (recently purchased / _____________ _____________ / old and ready to be disposed of / can’t tell).
Q6. An accelerated depreciation method is (SL / _____________), which means that a greater amount of depreciation expense is reported at the (_____________ / end) of the asset’s useful life.
Q7. If a building is being depreciated, the (SL / DDB /_____________) method can be used.
(But SL better reflects the cost to each accounting period.)
If an auto is being depreciated, the (SL / DDB / _____________) method can be used.
(But DDB better reflects the decline in market value.)
Q8. Land (is / _____________) depreciated because it has an indefinite life.
Q9. The company generally appears better to shareholders when using (_____________ / DDB). Why?
Q10. For tax purposes, (SL / _____________) is usually preferred. Why?
Q11. May a company choose one depreciation method for reporting to shareholders and a different depreciation method for tax purposes? (_____________/ No)