Indicate Whether Each of the Following Statements Regarding Accounting for Long-Term

question 154

Short Answer

Indicate whether each of the following statements regarding accounting for long-term assets is true or false.
_____ a) Other things being equal, the lower a company estimates the salvage value of a plant asset to be, the lower the company's net income will be.
_____ b) Depreciation expense is an example of a "non-cash" expense.
_____ c) A company cannot use the double declining method of depreciation for financial statements while using the straight-line method of depreciation for tax returns.
_____ d) The book value of an asset is the amount a company believes it is worth (its fair market-value) as of the date of the balance sheet.
_____ e) MACRS is not an acceptable way of computing depreciation expense under GAAP.

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Definitions:

Rental Price

The cost associated with leasing or renting a property, such as a house, apartment, or commercial space.

Capital Stock

The total amount of physical goods or assets that a company or country uses in the production of goods and services.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, while holding all other inputs constant.

Factor of Production

A resource utilized in the creation of goods and services that encompasses labor, capital, land, and entrepreneurship.