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

Which method of depreciation is most commonly used by U.S. companies for financial reporting purposes?

Sum-of-the-years'-digits method

Double declining balance method

Units of production method

Straight-line method

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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 reflects the wear and tear or obsolescence of the asset over time.

Learn about the different methods of depreciation: The methods include Straight-line, Double declining balance, Sum-of-the-years'-digits, and Units of production. Each method calculates depreciation differently based on the asset's usage or time.

Focus on the Straight-line method: This method is the most commonly used for financial reporting purposes in the U.S. It allocates an equal amount of depreciation expense each year over the asset's useful life.

Understand why Straight-line is preferred: It is simple to calculate and provides consistent expense recognition, making it ideal for financial reporting and compliance with accounting standards like GAAP.

Review the other methods for comparison: While other methods like Double declining balance or Units of production may be used for specific scenarios, they are less common for financial reporting due to their complexity or variability in expense recognition.