Practice Benefits of Switching Methods - 5.1 | 6. Sum of the Years Digit Method | Construction Engineering & Management - Vol 1
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the main reason for switching depreciation methods?

💡 Hint: Consider why businesses want to accurately reflect asset value.

Question 2

Easy

List two depreciation methods discussed.

💡 Hint: Think of the methods that show different depreciation schedules.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the primary reason companies switch from DDB to SL methods?

  • To increase taxable income
  • To match book value with salvage value
  • To avoid recording depreciation

💡 Hint: Focus on the relationship between book value and salvage value.

Question 2

True or False: The Straight-Line method will always result in a higher depreciation expense than the Double Declining Balance method.

  • True
  • False

💡 Hint: Consider the nature of how each method calculates depreciation over time.

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Challenge Problems

Push your limits with challenges.

Question 1

You have an asset costing $50,000, with a salvage value of $5,000 and a useful life of 10 years. If you’ve been using DDB for 3 years and need to switch to SL, calculate the new depreciation expense for the upcoming year.

💡 Hint: Consider the formulas for both methods and adjust your calculations as needed.

Question 2

A company has a piece of equipment costing $120,000, with a salvage value of $10,000 and a life of 8 years. After 5 years on DDB, it plans to switch to SL. Calculate how this switch impacts its financials.

💡 Hint: Ensure to keep track of all calculations for accurate financial reporting.

Challenge and get performance evaluation