Depreciation

Depreciation Expense shown on a company's income statement must be the same amount as the depreciation expense on the company's income tax return

• True

• False

Depreciation Expense reflects an allocation of an asset's original cost rather than an allocation based on the economic value that is being consumed

• True

• False

An asset's useful life is the same as its physical life?

• True

• False

Depreciation Expense is shown on the income statement in order to achieve accounting's matching principle.

• True

• False

If a company continues to use equipment past the useful life that was assumed in determining the depreciation, there will be no Depreciation Expense in those additional years.

• True

• False

Depreciation Expense is sometimes referred to as a noncash expense.

• True

• False

Both Land and Land Improvements will generally be depreciated

• True

• False

Depreciation Expense shown on the financial statements is a precise amount that is continuously refined.

• True

• False

A company may depreciate equipment over 10 years on a straight-line basis for its financial statements, but might use an accelerated method of depreciation over a shorter time period on its income tax return?

• True

• False

One company might depreciate a new truck over three years while another company might depreciate the same model truck over five years...and both companies are right.

• True

• False