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Which of the following statements related to depreciation is true? Multiple Choice The residual value of...

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 asset’s 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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Answer #1

Question: Which of the following statements related to depreciation is true?

Answer : statement related to depreciation which is true:

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

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

Answer : Subsequent recovery of an impairment loss is allowed for a finite-life intangible asset

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