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3 cards from this section. Quick, good the night before a test.
What is depreciation?
Think about how expenses are accounted for over time.
Name one cause of depreciation.
Consider factors that reduce asset value.
What does depreciation help match in accounting?
Consider how accounting reflects economic reality.
True or False: Depreciation is a cash expense.
Think about cash flow versus accounting records.
A company buys a delivery truck for $40,000. The estimated residual value is $4,000, and the useful life is 8 years. Using the Straight Line Method, calculate annual depreciation and the book value at the end of year 4.
Break down the problem step by step.
Discuss the implications of changing a depreciation method from Straight Line to WDV for a company that has highlighted lower profits due to depreciation. What factors could justify this change?
Think about financial strategies and regulatory influences.
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