Question

Tom Parkey has prepared the following list of statements about depreciation. Identify each statement as true or false.

Answer 1

Answer:

Explanation:

1) False. As depreciation is a process of cost allocation, not asset valuation.

2) True.

3) False. As the book value is different from market value and it can be more or less.

4) False. As depreciation applies only to building and equipment.

5) False. The correct statement ought to be depreciation does not apply to land because its usefulness and revenue-producing ability generally remain intact over time.

6) True.

7) False. Recognizing depreciation on assets results in an accumulation of cost for replacement of the asset.

8) True.

9) False. Accumulated depreciation is recorded in a balance sheet while depreciation expense is reported in the income statement.

10) False. As salvage value is the same as residual value, hence, it three factors affect the computation of depreciation.