Answered: Why does the depreciation included in…

Why does the depreciation included in computing the annual cost of annual worth method but not in computing the total cost of present and future worth method ?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 4DQ

See similar textbooks

Related questions

Q: Demonstrates the difference between depreciation costs as expenses and the cash flow generated by…

A: Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income…

Q: Which of the following methods applies a declining depreciation rate each period to an asset's…

A: Sum-of-the-years' digits Method: Calculating the predicted depreciation of an asset over time using…

Q: 1. What amount of depreciation should be reported in the historical cost income statement for 2021?…

A: 1. Depreciation Expense based on Historical Cost = P5,000,000/5years = P1,000,000 2.…

Q: Residual value is: A. Also called residual value. B. Also called scrap value. C. An estimate of the…

A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…

Q: How are the total depreciation and final book value are calculated?

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its…

Q: How was the depreciation for fix assets calculated?

A: Deprecaition Expenses There are different method which are used to calculate the deprecation of the…

Q: Contrast the effects of the straight-line, declining-balance, and activity-based methods on annual…

Q: Which of the following is not a factor in selecting a depreciation method? a. salvage value b.…

A: Depreciation is charged on cost of assets on annual basis for repair and maintenance costs and…

Q: The total cost of an asset less its accumulated depreciation is called: Multiple Choice Historical…

A: Book value = Total cost of assets - Accumulated Depreciation

Q: What is the systematic periodic transfer of the cost of a fixed asset to an expense account during…

A: It is a measure of the wearing out, consumption or other loss of value of depreciable asset arising…

Q: What is the total investment cost for this machine? By what amount did the recovered depreciation…

A: Depreciation: Depreciation is the accounting method used for assets. Which allocates the cost of the…

Q: Which depreciation method ignores residual value until the last year of depreciation? Why?

A: Double declining method of depreciation does not consider residual value while calculating…

Q: Calculate the annual depreciation

A: Purchase cost of machine = $850,000 Productive life = 7 years Salvage value = $150,000 Depreciable…

Q: What costs should be included when measuring the total cost to acquire a long-term asset?

A: Long-term assets: The assets which are used to generate revenue for the business operations for a…

Q: The cost of an asset that is subject to depreciation os called?

A: Assets: Assets are those resources that are owned by the business organization which has an economic…

Q: What does accumulated depreciation represent?

Q: Is residual value deductible when using accelerated method of depreciation>

A: The accelerated method of depreciation includes double declining balance method, 150% declining…

Q: Depreciation should be applied to a new long-lived item over what time period? Explain

A: This question explains about applied to a new long-lived item over what time period.

Q: What is the amount of the annual depreciation computed by the straight-line method?

A: Depreciation: It is the reduction in the value of an asset due to normal wear and tear,…

Q: fhich of the tfollowing statement best describes depreciation? a. It is a means of spreading the…

A: Fixed assets: These are the assets which were used in the business for more than one year. These…

Q: Write the fraction obtained from the straight-line depreciation rate?

A: Depreciation expense accounts for the decline in the value of assets used in the business due to…

Q: How do you figure units-of-production method depreciation?

A: The business entities are required to charge the depreciation expense on their assets so that the…

Q: Depreciation can be defined as the measure of cost or revalued amount of economic benefits of a…

A: Depreciation can also be defined as: It records the usage of a fixed asset over a period of time and…

Q: How do you know the ratesw on straight line depreciation?

A: Solution:- The following way to find depreciation rates on straight line depreciation method as…

Q: the equation for book value is: book value = cost of an asset minus its accumulated depreciation.…

A: Asset: Asset is a resource owned by a company from which future economic benefits are expected to…

Q: A method that ignores residual value in calculating periodic depreciation expenses in the earlier…

A: The value of an asset reduces over the life or as per the usage and the reduced value is known as…

Q: Explain the term Treatment of Depreciation Expenses?

A: Depreciation is a charge calculated on the value of fixed assets, based on normal wear and tear due…

Q: (a) The depreciable cost (b) The straight-line rate (c) The annual straight-line depreciation %

A: Introduction:- Straight line depreciation is a common and simplest method of calculation…

Q: Which of the following is not a factor in computing depreciation for a period? present value…

A: SOLUTION- Present value is not a factor for calculating depreciation.

Q: Under what circumstances will you consider the reducing balance method as the most appropriate…

Q: Why aren't they fully expensed at the time they are purchased?

A: Assets : - Assets are classified into two types. 1. Fixed assets 2. Current assets Depending on…

Q: Define the term accumulated depreciation and amortization?

A: Accumulated Depreciation and Depreciation. Every asset’s value decreases over time the reason being…

Q: depreciation for the current year using the composite method

A: Asset name Cost Residual value Depreciable amount (Cost -Residual value) Useful life in years…

Q: How is the straight-line depreciation calculated?

A: Definition: Straight-line depreciation method: The depreciation method which assumes that the…

Q: How was the depreciation calculated?

A: As per the US tax laws, various rates of depreciation for each class of assets are specified. For…

Q: Compute the first-year depreciation using the straight-line method. Straight-Line Depresiation…

A: Straight line method of depreciation is that method in which business charges full cost of asset as…

Q: Why was the salvage value used in calculating the depreciation expense?

A: This method also called diminishing balance method or declining balance method where the…

Q: Which one of the following methods charges depreciation at a rate double to the one used in straight…

A: Depreciation is considered a reduction in the value of assets due to the use of that asset. We can…

Q: When do the depreciation expenses lose some of their value? Why?

A: Depreciation is a process in the decrease in the value of an asset. A reduction in the value over a…

Q: How does depreciation expense differ from other operatingexpenses?

A: Depreciation: It refers to a gradual decrease in the fixed asset’s value because of obsolescence,…

Q: Which of the following best describes depreciation? A It is a means of spreading the payment for the…

A: Depreciation represents how much asset's value has been used and charge the same as expense in the…

Q: What is the difference between the cost of a fixed asset and its accumulated depreciation called?…

A: Accumulated depreciation is the total of all the depreciation that has been charged to the asset…

Q: accumulated depreciatio

A: Depreciation shows the reduction in the value of a long term asset over a useful life of the asset.…

Q: What is Depreciation calculation?

A: Depreciation: Depreciation Cost is the cost that is allocated over its life and it is charged as an…

Question

Why does the depreciation included in computing the annual cost of annual worth method but not in computing the total cost of present and future worth method ?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

What amounts should be recorded as a cost of a long-term asset?
Do I have to include depreciation when computing net present value?
What are the estimates when calculating depreciation? Which estimates may be revised?
What is the amount of the annual depreciation computed by the straight-line method?
What is the difference between the cost of a fixed asset and its accumulated depreciation called? Group of answer choices book value current value fixed value equity value
How much is the estimated loss on asset realization?
Is the Accumlated Depreciation and Depreciateion expense both positive numbers?
Explain the historical cost concept as it applies to long-term operational assets. Why is the book value of an asset likely to be different from the current market value of the asset?
Why is depreciation added to Net CAPEX? A To adjust CAPEX for taxable income B To isolate changes due to buying or selling of CAPEX с To reflect the economic value of the fixed assets
Q. How is depreciation calculated? Is depreciation a fixed cost?
Which of the following is not a factor in selecting a depreciation method? a. salvage valueb. repair and maintenance costsc. Inflationd. the risk associated with the cash flows from the asset
What are depreciation and its purpose? Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Why or why not? Should the financial statements reflect the value of fixed assets? Why or why not?