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3 cards from this section. Quick, good the night before a test.
What is depreciation?
Think about the wear and tear on a machine.
List the components needed to calculate straight line depreciation.
Consider what information you'd need about the equipment.
What is the formula for calculating annual depreciation using the Straight Line Method?
Remember DICer!
The Straight Line Method assumes depreciation occurs at what rate?
Consider what happens each year in value.
A company buys a crane for $200,000. The crane’s salvage value is $30,000, and it has a useful life of 15 years. Also, tire costs are $10,000. Calculate the annual depreciation. How might this impact their financial reports over the years?
Substitute everything correctly into the formula.
Consider a construction company that uses a backhoe for 10 years, initially costing $50,000, with a salvage value of $5,000 and a tire cost of $5,000. If they switch to an accelerated depreciation method, how would that affect their immediate tax obligations compared to the Straight Line Method?
Consider how each method tracks loss and how that impacts financial statements.
5 more questions in this section. Enroll free to practise them all.
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