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

Which of the following formulas is used to calculate the activity-based depreciation rate?

Accumulated Depreciation \( \div \) Total Estimated Activity

Depreciable Cost \( \div \) Total Estimated Activity

Cost of Asset \( \div \) Useful Life (in years)

Book Value at Beginning of Year \( \times \) Depreciation Rate

Previous problemNext problem

Verified step by step guidance

Understand the concept of activity-based depreciation: Activity-based depreciation allocates the cost of an asset based on its usage or activity level rather than time. This method is useful for assets whose wear and tear depend on usage rather than the passage of time.

Identify the correct formula for activity-based depreciation rate: The formula is Depreciable Cost divided by Total Estimated Activity. Depreciable Cost is calculated as the Cost of Asset minus its Salvage Value.

Break down the formula: Depreciable Cost is the portion of the asset's cost that will be depreciated over its useful life. Total Estimated Activity refers to the total expected usage or activity level of the asset during its useful life.

Compare the given options: Evaluate each formula provided in the problem and determine which one aligns with the activity-based depreciation method. The correct formula is Depreciable Cost divided by Total Estimated Activity.

Apply the formula in practice: To calculate the activity-based depreciation rate, use the formula: