Question

8. Which method ignores residual value when calculating depreciation? 9. What is the name of the Federal Income Tax Method? 10. When Selling Fixed assets how do you calculate the Book Value? Once you have book value if you sell the asset for more cash than book value what is it called? Less than book value what is it called? 11. What is the method used to record the consumption of natural resources. To what depreciation method is it similar?

Answer 1

8) Double declining method ignores residual value when calculating depreciation , However residual value will be decreased from last years depreciation.

9) Percentage method is the federal income tax method.

10) Book value is nothing but Cost of the asset minus Accumulated depreciation. If sale price is morethan book value , that means gain on sale of the asset. Gain on sale of the asset is nothing but difference between book value and sale price. If it is less than book value then it is called loss on sale of asset.

11) For the consumption of naural resources companies usually uses Units of production method Which is similar to units production depreciation method.