5.1 - Benefits of Switching Methods
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Practice Questions
Test your understanding with targeted questions
What is the main reason for switching depreciation methods?
💡 Hint: Consider why businesses want to accurately reflect asset value.
List two depreciation methods discussed.
💡 Hint: Think of the methods that show different depreciation schedules.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary reason companies switch from DDB to SL methods?
💡 Hint: Focus on the relationship between book value and salvage value.
True or False: The Straight-Line method will always result in a higher depreciation expense than the Double Declining Balance method.
💡 Hint: Consider the nature of how each method calculates depreciation over time.
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Challenge Problems
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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.
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.
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