 Show 40-11 Multiple choice (PAS 16) 1. Which statement best describes the term depreciation? a. The systematic allocation of the cost of an asset less residual value over the useful life. b. The removal of an asset from the statement of financial position. c. The amount by which the recoverable amount of an asset exceeds carrying amount. d. The amount by which the carrying amount of an asset exceeds recoverable amount. 2. Carrying amount is a. Cost of an asset or the amount substituted for cost in the financial statements, less residual value. b. Amount of cash paid or the fair value of the other consideration given to acquire an asset at the tirne of acquisition or construction. c. Net amount which the entity expects to obtain for an asset at the end of the useful life after deducting the expected cost of disposal. d. Amount at which an asset is recognized in the statement of financial position after deducting any accumulated depreciation and accumulated impairment loss. 3. Which statement is incorrect with respect to depreciation? a. The depreciation method shall reflect the pattern in which the asset's economc benefits are consumed by the entity. b. Depreciation of an asset begins when it is available for use or when it is in the location and condition necessary for the intended use. c. Depreciation ceases at the earlier between the date the asset is classified as held for sale and the date the asset is derecognized. d. Depreciation is not recognized if the fair value of an asset exceeds carrying amount. 4. Which statement is true with respect to residual value? a. Residual value is the estimated net amount currently obtainable if the asset is at the end of the useful life. b. The residual value of an asset may increase to an amount equal to or greater than carrying amount in which case the deprecation charge is zero. c. The residual value of an asset shall be reviewed at least at each financial year-end and any change is accounted for as a change in accounting estimate. d. All of these statements are true. 5. The useful life of property, plant and equipment is I. The period of time over which an asset is expected to beused by the entity. II. The number of production or similar unite expected to be obtained from the asset by the entity. a. I only b. II only c. Both I and II d. Neither I nor II 6. All of the following factors are considered in determining the useful life of an asset, except Why certain long lived assets are depreciated amortized )? Explain?Once acquired, the cost of a long lived asset is usually depreciated (for tangible assets) or amortized (for intangible assets) over the expected useful life of the asset. This is done in order to match the ongoing use of the asset with the economic benefits derived from it.
Which of the following best describes depreciation?Depreciation: Depreciation is the writing off the value of assets due wear and tear and obsolesce and other reasons. The amount is written off over the useful life of the asset. Hence option b is the correct.
What is the purpose of depreciation quizlet?The purpose of depreciation is to have the balance sheet report the current value of an asset. Depreciation Expense reflects an allocation of an asset's original cost rather than an allocation based on the economic value that is being consumed.
What depreciation means quizlet?What is depreciation ? Depreciation is defined as the allocation of the cost of a non-current asset over its estimated useful life. It is considered as part of the cost of non-current asset that has been used up to earn income.
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Which of the following statements most appropriately describes the purpose of depreciating a long
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