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Questions and Answers
What does straight-line depreciation assume?
How is the annual depreciation calculated in the straight-line depreciation method?
What is accelerated depreciation?
Which method allows for more depreciation in the early years of an asset's life?
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Study Notes
Straight-Line Depreciation
- Straight-line depreciation assumes that an asset's value decreases at a constant rate over its useful life.
- It assumes that the asset's value decreases uniformly over time.
Calculating Annual Depreciation
- In the straight-line depreciation method, the annual depreciation is calculated by dividing the asset's cost minus its residual value by its useful life.
Accelerated Depreciation
- Accelerated depreciation is a method of depreciation that assumes an asset's value decreases more quickly in the early years of its life.
- It is used to reflect the fact that some assets lose more value in the early years of their use.
Comparison of Depreciation Methods
- Accelerated depreciation allows for more depreciation in the early years of an asset's life compared to straight-line depreciation.
- It provides a more rapid write-off of an asset's cost in the early years, resulting in higher depreciation expenses in the early years.
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Description
Test your knowledge on straight-line depreciation and accelerated depreciation methods with this quiz. Learn about how these methods are used to calculate the depreciation of real property and understand the difference between them.
