A Company Depreciates an Item of Machinery Using the Straight-Line

question 18

Multiple Choice

A company depreciates an item of machinery using the straight-line method. The asset was revalued upwards after two years of use. The remaining useful life of four years and the residual value are determined to remain the same. Which of the following relationships reflects the effect of the revaluation on the prospective depreciation of the machinery?

• A) Depreciation rate = Same; Annual depreciation expense = Same.
• B) Depreciation rate = Higher; Annual depreciation expense = Higher.
• C) Depreciation rate = Same; Annual depreciation expense = Higher.
• D) Depreciation rate = Higher; Annual depreciation expense = Same.

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Definitions:

Inorganic Fertilizers

Mineral-based compounds applied to soil to supply nutrients required for plant growth, as opposed to organic fertilizers derived from living organisms.

Plantation Agriculture

A form of commercial farming where crops are grown for profit. It typically involves large-scale operations and focuses on a few high-demand cash crops like sugar, cotton, and tea.

Soil Erosion

The removal of the top layer of soil due to water, wind, or human activity, leading to decreased soil fertility and increased vulnerability to environmental challenges.

Traditional Agriculture

Farming practices that rely on indigenous knowledge, natural resources, and cultural beliefs, often with a focus on sustainability.