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: Straight Line

Financial Accounting

8. Long Lived Assets

Depreciation: Straight Line

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Multiple Choice

For which of the following assets would a wholesale company use depreciation under the straight-line method?

Cash in bank

Inventory held for resale

Delivery trucks

Accounts receivable

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Verified step by step guidance

Understand the concept of depreciation: Depreciation is the allocation of the cost of a tangible asset over its useful life. It is applied to assets that have a finite life and are used in the operations of a business.

Identify the type of assets that are subject to depreciation: Depreciation is typically applied to fixed assets such as buildings, machinery, equipment, and vehicles. These assets are used in the business and lose value over time due to wear and tear or obsolescence.

Review the assets listed in the problem: Cash in bank, inventory held for resale, delivery trucks, and accounts receivable. Determine which of these assets are fixed assets and have a finite useful life.

Exclude assets that are not depreciable: Cash in bank is a liquid asset and does not lose value over time. Inventory held for resale is classified as a current asset and is expensed when sold, not depreciated. Accounts receivable represent amounts owed to the company and are not subject to depreciation.

Conclude that delivery trucks are the correct asset for depreciation under the straight-line method: Delivery trucks are fixed assets used in the operations of the business and have a finite useful life. The straight-line method allocates the cost of the trucks evenly over their useful life.