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11 double declining balance depreciation computes total depreciation by multiplying 4297899


11) Double-declining-balance depreciation computes total depreciation by multiplying the asset's cost by two times the straight-line rate.

12) The use of the straight-line method of computing depreciation increases a company's tax liability, thereby increasing the company's cash flow.

13) Under the double-declining balance method of depreciation, residual value is initially ignored.

14) It is illegal to use one method of depreciation for financial purposes and another method for tax purposes.

15) Since depreciation is an estimate, depreciation must be computed for the entire year, regardless of when the asset was purchased.

16) Changes in accounting estimates are not allowed under the consistency principle.

17) Depreciation expense decreases both assets and equity.

18) The book value of an asset cannot be less than its residual value.

19) The process of allocating the cost of a plant asset to expense over the period in which the asset is used is called:

A) amortization.

B) allocation.

C) depreciation.

D) disclosure.

20) The process of depreciating an asset over its useful life is an application of the ________ principle.

A) full disclosure

B) revenue recognition

C) historical cost

D) matching



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