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Which of the following statements related to depreciation is true? Multiple Choice The residual value of an asset depends on the depreciation method chosen. If

Which of the following statements related to depreciation is true?

Multiple Choice

  • The residual value of an asset depends on the depreciation method chosen.

  • If a company uses double-declining-balance method for tax purposes, the company must also use this method for financial reporting purposes.

  • Over the life of an asset, total reported profits will be greater under the straight-line method than under the double-declining-balance method.

  • Conceptually, activity-based depreciation provides a better matching of the assets cost to the use of that asset to help produce revenues.

The difference in testing for impairment of a finite-life versus indefinite-life intangible asset is:

Multiple Choice

  • The measure of an impairment loss for an indefinite-life intangible assets is not based on book value.

  • Subsequent recovery of an impairment loss is allowed for a finite-life intangible asset.

  • The cash flow recoverability test is omitted for an indefinite-life intangible asset.

  • Companies are not required to recognize impairment losses on finite-life intangible assets.

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