Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

8. Long Lived Assets

Depreciation: Summary of Main Methods

Financial Accounting

8. Long Lived Assets

Depreciation: Summary of Main Methods

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Multiple Choice

Which of the following depreciation methods is allowed under U.S. GAAP?

Straight-line method

Revaluation method

Sum-of-the-years'-digits method

Reducing balance method

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Verified step by step guidance

Understand the context: Depreciation is the allocation of the cost of a tangible asset over its useful life. Under U.S. GAAP (Generally Accepted Accounting Principles), certain depreciation methods are allowed, while others are not.

Step 1: Identify the depreciation methods mentioned in the problem. These are: Straight-line method, Revaluation method, Sum-of-the-years'-digits method, and Reducing balance method.

Step 2: Recall that under U.S. GAAP, the Revaluation method is not allowed. This method involves adjusting the carrying amount of an asset to its fair value, which is permitted under IFRS (International Financial Reporting Standards) but not under U.S. GAAP.

Step 3: Confirm that the Straight-line method, Sum-of-the-years'-digits method, and Reducing balance method are all acceptable under U.S. GAAP. These methods allocate depreciation in different patterns over the asset's useful life.

Step 4: Conclude that the allowed methods under U.S. GAAP from the given options are: Straight-line method, Sum-of-the-years'-digits method, and Reducing balance method. The Revaluation method is not allowed.