5 - Depreciation Accounting Methods
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Practice Questions
Test your understanding with targeted questions
What are the two main components of equipment costs?
💡 Hint: Think about costs that are incurred whether the equipment is used or not.
Define depreciation in your own words.
💡 Hint: Consider how equipment wears down or loses value.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary distinction between ownership and operating costs?
💡 Hint: Think about costs that are always present.
True or False: Depreciation is a cash expense.
💡 Hint: Consider whether this represents an actual payment.
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Challenge Problems
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A piece of equipment costs $200,000, has a salvage value of $20,000, and a useful life of 8 years. Calculate its annual depreciation using both the straight line and double declining balance methods.
💡 Hint: Calculate straight-line normally; remember double declining balance requires calculating based on book value.
If a machine has a useful life of 10 years and an initial cost of $100,000 with a salvage value of $10,000, outline the first year's depreciation using the sum of years' digits method.
💡 Hint: Sum of the digits from 1 to 10 gives you the denominator.
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