Which of the Following Is Not a Difference Between the Accounting

question 69

Multiple Choice

Which of the following is not a difference between the accounting treatment for depreciation and cost depletion?

• A) Depletion applies to natural resources while depreciation applies to plant and equipment.
• B) Depletion refers to the physical exhaustion or consumption of the asset while depreciation refers to the wear, tear, and obsolescence of the asset.
• C) Many formulas are used in computing depreciation but only one is used to any extent in computing depletion.
• D) The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year as the starting point for the periodic charge for depletion.

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Definitions:

Scheduled Hours

The set times during which an employee is expected to be at work, as determined by their employer.

Qualified Retirement

A retirement plan that meets requirements set by the Internal Revenue Code, offering tax benefits such as tax-deferred growth on earnings.

Tax Regulations

Comprise the laws and rules governing how taxes are assessed, collected, and managed by governmental entities.

Favorable Tax Treatment

Tax policies or practices that are advantageous to businesses or individuals, reducing the amount of tax they have to pay.