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.