Depreciation of Fixed Asset

What is the primary advantage of using the straight-line depreciation method?

• It results in a higher depreciation expense in the early years.

• It matches depreciation expense evenly over the asset's useful life.

• It allows for tax benefits in the later years

• It reflects the asset's market value accurately.

In the straight-line depreciation method, how does the depreciation expense change over the asset's useful life? a.

• It decreases each year.

• It increases each year.

• It remains constant

• It is unpredictable

What is the formula for straight-line depreciation?

• (Cost of Asset x Salvage Value) / Useful Life

• (Cost of Asset - Salvage Value) / Useful Life

• (Cost of Asset + Salvage Value) / Useful Life

• Cost - scrap value

Which method of depreciation results in a higher expense in the earlier years of an asset's life?

• Sum of the year digit

• reducing balance method

• Units of production depreciation

• Straight-line depreciation

Another name for reducing balance method is

• annuity method

• sum of the year digit

• diminishing balance method

• straight line method

ABC Ltd purchased a machine for #560,000 on 1st January, 2021. The machine is expected to use 5 years and have a scrap value of #60,000.

Calculate the yearly depreciation using the straight line method

• #200,000

• #500,000

• #620,000

• #100,000

The cost of the asset is #770,000, Scrap value is #110,000. The asset is expected to use 3 Years. What is the net book value at the end of Year 2

• #220,000

• #440,000

• #660,000

• #880,000

The cost of the asset is #770,000, Scrap value is #110,000. The asset is expected to use 3 Years. What is the yearly depreciation.

• #110,000

• #220,000

• #440,000

• #660,000

One of the depreciation method that has a fixed rate is the

One of the following is not a depreciable assets

• Building

• Furniture

• Land

• Equipment