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 assets will likely experience the most depreciation over a 10-year period?

Office building

Delivery truck

Office furniture

Land

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Verified step by step guidance

Understand the concept of depreciation: Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. Assets that are subject to wear and tear, obsolescence, or physical deterioration typically experience depreciation.

Analyze the nature of each asset: Delivery trucks are subject to frequent use, wear and tear, and may become obsolete due to advancements in technology or changes in transportation needs. Office furniture may experience wear but typically has a longer useful life. Office buildings generally depreciate at a slower rate due to their durable nature. Land does not depreciate because it does not wear out or become obsolete.

Consider the factors affecting depreciation: Delivery trucks are used extensively in operations, leading to faster physical deterioration and obsolescence. Office furniture and buildings are less prone to rapid depreciation, and land is not depreciated at all under accounting standards.

Apply accounting principles: Delivery trucks are classified as equipment and are depreciated using methods such as straight-line or accelerated depreciation, reflecting their shorter useful life compared to other assets listed.

Conclude based on the analysis: Delivery trucks are likely to experience the most depreciation over a 10-year period due to their high usage, wear and tear, and potential obsolescence.