Practice - Factors Affecting Depreciation
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Practice Questions
Test your understanding with targeted questions
What do we call the original price paid for an asset?
💡 Hint: It's the initial amount spent to acquire the asset.
What is salvage value?
💡 Hint: Think about the return you might get when you sell an asset after using it.
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Interactive Quizzes
Quick quizzes to reinforce your learning
Which of the following affects the annual depreciation expense of an asset?
💡 Hint: Think about which factor contributes to how we assess an asset's value.
True or False: The estimated useful life of an asset is irrelevant to its depreciation calculation.
💡 Hint: Reflect on how long an asset is used and how it impacts accounting.
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Challenge Problems
Push your limits with advanced challenges
A small business purchases a delivery truck for ₹500,000, forecasting its useful life to be 10 years and expecting a salvage value of ₹50,000. Calculate the annual depreciation using the straight-line method.
💡 Hint: Don’t forget to subtract the salvage value before dividing by the useful life!
If a company decides to switch from the written down value method to the sum of the years' digits method for an asset purchased for ₹200,000, with a useful life of 5 years, calculate the first-year depreciation under the new method.
💡 Hint: First, find the sum of the digits for the years, then apply the formula.
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