Which of the Methods Below Is a Way to Allocate

question 9

Multiple Choice

Which of the methods below is a way to allocate depreciation?

• A)The allocation each year is the amount of cost as determined by the actual estimated usage for that year.
• B)Use the government-mandated accelerated depreciation system,which depreciates the capital asset at the minimum accelerated amount allowed each year.
• C)The allocation each year is the same amount of cost as determined by the average expected operating cash inflow divided by the number of years of useful life of the machines.
• D)Use the government-mandated accelerated depreciation system,which depreciates the capital asset at the maximum accelerated amount allowed each year.

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Definitions:

Statement of Changes

A financial statement that shows how the equity of a company has changed over a certain period due to various reasons like profits, losses, or distributions.

Deferred Tax Liability

A tax obligation due in the future for income that has been recognized in the financial statements before it is taxable by tax authorities.

Tax Depreciation

The depreciation expense deducted for tax purposes, allowing taxpayers to recover the cost of a property or asset used in a trade or business for income-producing purposes.

Accounting Depreciation

Represents the systematic allocation of the depreciable amount of an asset over its useful life, reflecting the wear and tear, obsolescence, or other declines in value as an expense in the income statement.