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University of Toronto St. George
Rotman Commerce
Xin Baohua

CHAPTER 11DEPRECIATION IMPAIRMENTS AND DEPLETIONIFRS questions are available at the end of this chapterTRUEFALSEConceptualAnswerNoDescriptionT1Nature of depreciationF2Nature of depreciationT3Depreciation depletion and amortizationT4Definition of depreciation baseF5Factors involved in depreciation processF6Definition of inadequacyT7Objection to straightline methodF8Unitsofproduction approachF9Accelerated depreciation methodT10Decliningbalance methodT11Group or composite approachF12Use of the composite approachT13Accounting for changes in estimatesF14Computation of impairment loss amountT15First step in determining an impairmentT16Reporting impaired assets held for disposalF17Method used to compute depletionT18Costs included in depletion baseF19Computing asset turnover ratioT20Profit margin on sales ratioMULTIPLE CHOICEConceptualAnswerNoDescriptiond21Knowledge of depreciation accountingb22Conceptual rationale for depreciation accountingc23Depreciation and retaining fundsSb24Definition of depreciationSa25Service life vs physical lifePa26Definition of depreciable costd27Economic factors affecting useful service lifed28Factors involved in computing depreciationd29Straightline method assumptiona30Activity method of depreciationa31Unitsofproduction method of depreciationd32Unitsofproduction method of depreciationd33Knowledge of doubledeclining balance methodc34Components of sumoftheyearsdigits methodc35Graphic depiction of straightline and sumoftheyearsdigits methodsTest Bank for Intermediate Accounting Thirteenth Edition112b36Disadvantage of using straightline methodMULTIPLE CHOICEConceptualcontAnswerNoDescriptionb37Group method of depreciationd38Identification of composite lifePc39Group method of depreciationSc40Composite or group depreciationb41Partialyear depreciation computationb42Depreciation for part yearc43Change in estimated life of depreciable assetb44Reporting a change in estimateb45Recording an asset impairmentd46Depreciation and cost depletion similaritiesd47Difference between depreciation and cost depletiond48Depreciation and liquidating dividendsa49Classification of depletion expensed50Unitsofproduction depletion expensed51Reserve recognition accountingSc52Items part of depletion costSb53Required disclosures for depreciationPb54Definition of book valued55Disclosure of depreciation policyd56Asset turnover ratiod57Return on total assets ratioc58Objectives of MACRS methodd59Factors to consider in MACRS tax depreciationc60Effect of accelerated depreciation on the income statementP These questions also appear in the ProblemSolving Survival GuideS These questions also appear in the Study Guide This topic is dealt with in an Appendix to the chapterMULTIPLE CHOICEComputationalAnswerNoDescriptionc61Factors involved in depreciationc62Calculate depreciation using activity methodb63Calculate doubledeclining balance depreciationc64Calculate doubledeclining balance depreciationb65Calculate depreciation using activity methodc66Calculate depreciation using activity methodb67Calculate depreciation using activity methodc68Calculate depreciation using doubledeclining balance methodb69Calculate depreciation using activity methodc70Calculate depreciation using doubledeclining balance methodb71Calculate depreciation using doubledeclining balanceb72Calculate depreciation using doubledeclining balanceb73Calculate depreciation using doubledeclining balanceb74Calculate depreciation using doubledeclining balancec75Sumoftheyearsdigits method113Depreciation Impairments and DepletionMULTIPLE CHOICEComputationalcontAnswerNoDescriptionb76Sumoftheyearsdigits methoda77Calculate depreciation using sumoftheyearsdigitsc78Calculate depreciation using sumoftheyearsdigitsc79Determine acquisition cost from sumoftheyearsdigitsb80Determine acquisition cost from sumoftheyearsdigitsc81Calculate gain on sale of machinerya82Determine depreciation expense from change in Accumulated Depreciationaccountc83Determine depreciation expense from change in Accumulated Depreciationaccounta84Determine composite rate of depreciationa85Determine composite life of a group of assetsd86Depreciation and partial periodsc87Change in estimated useful lifed88Depreciation and partial periodsc89Change in estimated useful lifea90Entry under composite methodb91Calculate depreciation expense after change in estimateb92Compute composite depreciation ratec93Compute composite life of assetsa94Determine amount of impairment lossd95Recognizing loss on impairmenta96Recognizing loss on impairmentc97Recognizing loss on impairmentb98Change in estimated life of equipmenta99Determine depreciation expense after major overhaulb100Determine depreciation expense after major overhaulc101Record permanent impairment in value of fixed assetc102Calculate unitsofproduction depletion expensec103Calculate unitsofproduction depletion expenseb104Calculate unitsofproduction depletion expensed105Calculate unitsofproduction depletion expenseb106Capitalization of exploration costs and discovery valuesa107Calculate depletion per tonb108Entry to record depletionc109Calculate asset turnover ratioa110Calculate return on total assetsd111Calculate asset turnover ratioc112Calculate return on total assetsc113Calculate asset turnover ratioc114Calculate asset turnover ratioa115Calculate MACRS depreciation for the yeard116Calculate MACRS depreciation using optional straightline method
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