Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Under generally accepted accounting principles, how should corporations match the use of depreciable assets with the revenue produced?
A) by using the same depreciation methods
B) by using its straight-line depreciation as a tax deductible expense
C) by recording depreciation
D) by using accelerated depreciation

Question

Cost of the asset$100,000 
Life of the asset 5 years 
Depreciation rate20% 
Capital cost allowance rate 50% 
Residual value of the asset nil 
Income tax rate 50%
-Under generally accepted accounting principles, how should corporations match the use of depreciable assets with the revenue produced?
A) by using the same depreciation methods
B) by using its straight-line depreciation as a tax deductible expense
C) by recording depreciation
D) by using accelerated depreciation

Quizplus · Accepted Answer

Depreciation is the method used under generally accepted accounting principles (GAAP) to match the cost of a depreciable asset with the revenue it generates over its useful life, thereby spreading the cost of the asset over its useful life.

Cost of the Asset$100,000