What is the difference between depreciation and cost depletion?
Which of the following is not a similarity in the accounting treatment for depreciation and cost depletion? a. The estimated life is based on economic or productive life.
What is the depreciable base of an asset?
Accounting; Accounting questions and answers; Question 13 Which of following is not a similarity in the accounting treatment for depreciation and cost depletion? Question 13 options: A. The estimated life is based on economic or productive life. B. Assets subject to either are reported in the same
What is the total amount of depreciation?
Dec 13, 2015 · 42. 53. Which of following is not a similarity in the accounting treatment for depreciation and cost depletion? a. The estimated life is based on economic or productive life. b. Assets subject to either are reported in the same classification on the …
What is the relationship between rate of depreciation and life?
19. Which of the following is not a similarity in the treatment for depreciation and depletion? a. The estimated life is based on economic or productive life b. Assets are reported in the same classification in the statement of financial position c. The rate may be changed upon revision of the estimated productive life d. Both depreciation and depletion are based on time
What are the similarities in the accounting treatment for depreciation and cost depletion?
Depreciation is considered as a non-cash expense that reduces the company's net income. Cost depletion is also a non-cash expense that lowers the cost value of an asset. Both Depreciation and cost depletion account have debit balance and considered as expense.
What are the differences between the accounting treatment for depreciation and cost depletion?
There are two key differences between cost depletion and depreciation, which are: Cost depletion can only be used for natural resources, whereas depreciation can be used for all tangible assets. Cost depletion varies based on usage levels, while depreciation is a fixed periodic charge.May 4, 2017
What is difference between depletion and depreciation?
Depletion is used for measuring the systematic reduction in the value of mineral assets or natural resources while depreciation is used for measuring the systematic reduction in the value of the fixed assets or tangible assets.
What is the accounting treatment for depreciation?
Depreciation expense is recognized on the income statement as a non-cash expense that reduces the company's net income. For accounting purposes, the depreciation expense is debited, and the accumulated depreciation is credited.
What are the similarities and differences between depreciation and amortization?
Amortization is the practice of spreading an intangible asset's cost over that asset's useful life. Depreciation is the expensing of a fixed asset over its useful life.
What are the similarities and differences between depreciation depletion and amortization?
Depreciation spreads out the cost of a tangible asset over its useful life, depletion allocates the cost of extracting natural resources, such as timber, minerals, and oil from the earth, and amortization is the deduction of intangible assets over a specified time period; typically the life of an asset.
Which is not a depreciable asset?
Land is not depreciated because land is assumed to have an unlimited useful life. Other long-lived assets such as land improvements, buildings, furnishings, equipment, etc. have limited useful lives. Therefore, the costs of those assets must be allocated to those limited accounting periods.
What is depletion method of depreciation?
Depletion refers to an accrual accounting method used to determine the expense of extracting natural resources from the earth, such as wood, minerals, and oil. Just like depreciation and amortisation, depletion is a non-cash expense. It incrementally lowers an asset's cost value through scheduled income charges.Mar 11, 2022
What is depletion in accounting quizlet?
Depletion: That portion of a natural resource's cost that is used up in a particular period. Depletion expense is computed in the same way as units-of-production depreciation. A depleted asset usually flows into inventory and eventually to cost of goods sold as the resource is sold.
Which among the following is not a method of depreciation?
Answer: C) replacement method.Nov 30, 2020
What are the accounting treatments?
The two main accounting methods are cash accounting and accrual accounting. Cash accounting records revenues and expenses when they are received and paid. Accrual accounting records revenues and expenses when they occur. Generally accepted accounting principles (GAAP) requires accrual accounting.
What are the 3 methods of depreciation?
What Are the Different Ways to Calculate Depreciation?Depreciation accounts for decreases in the value of a company's assets over time. ... The four depreciation methods include straight-line, declining balance, sum-of-the-years' digits, and units of production.More items...
How much did Cominsky pay for the machine?
Cominsky Company purchased a machine on July 1, 2015, for $34,440. Cominsky paid $246 in title fees and county property tax of $154 on the machine. In addition, Cominsky paid $615 shipping charges for delivery, and $584 was paid to a local contractor to build and wire a platform for the machine on the plant floor.
What is the difference between service life and physical life?
a. service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last. b. physical life is the life of an asset without consideration of salvage value and service.
What is physical life?
physical life refers to how long the asset will be used by all owners. a. service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last. The term "depreciable base," or "depreciation base," as it is used in accounting, refers to.
What is service life in accounting?
a. service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last. The term "depreciable base," or "depreciation base," as it is used in accounting, refers to. a. the total amount to be charged (debited) to expense over an asset's useful life.
How long does McDonald's machinery last?
On January 1, 2014, McDonald estimated that the remaining life of this machinery was six years with no salvage value.