Chapter 9 Accounting quiz PDF

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Notes for the Chapter 9 Accounting quiz...

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1. Terms related to depreciation! Accelerated depreciation method- is the same as the doubled the climbing balance method! Book value- the difference between the fixed asset account and its related accumulated depreciation account! Capital expenditures- costs that improve the assets or extend its useful life! Depreciable cost- the difference between a fixed asset initial cost and its residual value! Expected useful life- the estimated length of time asset will be used in normal operations! Fixed assets- assets that are purchased for long-term use and are not likely to be converted quickly into cash! Initial cost- the purchase price of the asset plus all the costs to obtain and ready it for use! Residual value- the estimated value of the assets at the end of its useful life! Revenue expenditures- cost that benefit only the current period! Depreciation rate- the percent#rate#at which an asset is#depreciated.!

2. How to calculate plant asset depreciation over the time of an asset using a straight line method, doubled declining method, and units of output method!

Straight Line Method:

(cost- residual value) / number of years!

Example: (65,000-5,000) / 4 = 15,000!

Double Declining Method:

(100 / number of years) x 2 x cost! Example: (100 / 4) x 2= 50%! 50% x 65,000= 32,500! *for each year after you multiply by the (50%) to get depreciation! The next year would be 16,250 and the year after 8125!

Units of activity: ((100 / number of years) x 2 x cost) x (cost - double declining balance)! Example: 50% x (65,000-32,500)= 16,250!

((cost- residual value)/useful life; either miles or time) x the miles driven of that year! (40,000- 0)/ 100000 = .40/mile! yr1 .40 x 35000= 14000! yr3 .40 x 28000= 11200! !

3. Know how to pro-rate depreciation in the first year if the asset is not required at the beginning of the year!

(Accumulated Depreciation/ Years) x (number of months until years end / 12)

Journalizing it:! Depreciation Expense

Dr!

Accumulated Depreciation

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