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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

What is the primary purpose of using group or composite depreciation methods?

To maximize the total depreciation expense in the early years of an asset's life

To simplify the depreciation process for assets with similar characteristics by depreciating them as a single group

To allocate depreciation based on the fair market value of each individual asset

To ensure that each asset is depreciated over its exact useful life

Previous problemNext problem

Verified step by step guidance

Understand the concept of group or composite depreciation methods: These methods are used to simplify the depreciation process for assets that share similar characteristics, such as similar useful lives or functions.

Recognize the primary purpose: Instead of depreciating each asset individually, these methods allow for the depreciation of a group of assets as a single unit, streamlining the accounting process.

Identify the benefits: Group or composite depreciation methods reduce the complexity of tracking depreciation for individual assets, especially when there are many similar assets.

Clarify the distinction: These methods do not aim to maximize depreciation expense in the early years, allocate depreciation based on fair market value, or ensure exact useful life depreciation for each asset. Instead, they focus on simplifying the process.

Relate to practical application: Accountants often use these methods for assets like furniture, fixtures, or equipment that are similar in nature and have comparable useful lives, making the depreciation process more efficient.