Listed below are 10 terms followed by a list of phrases that describe or charact

Question

Listed below are 10 terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. Allocation base The replacement of a major component of plant and equipment asset. _______ Activity-based method Can be expressed in units of time or in unit of activity. _____ Residual value Cost allocation for an intangible asset. _____ Service life Allocates an equal amount of depreciable base to each period. _____ Amortization Multiples book value by twice the straightline rate. ____ Straight-line method Estimates service life in terms of a measure of activity. ____ Additions The amount the company expects to receive for the asset at the end of its life. ____ Depletion Cost allocation for natural resources. ___ Improvements Adding a new major component to existing plant and equipment. ____ Double-declining balance The difference between cost and residual value. ____

Explanation / Answer

Allocation Base Can be expressed in units of time or in units of activity. Activity Based Method Estimates service life in terms of a measure of activity. Residual Value The amount the company expects to receive for the asset at the end of its life. Service Life The difference between cost and residual value. Amortization Cost allocation for an intangible aseet. Straight-line method Allocates an equal amount of depreciable base to each period. Additions Adding a new major component to existing plant and equipment. Depletion Cost allocation for natural resources. Improvements The replacement of a major component of plant and equipment asset. Double-declining balance Multiplies book value by twice the straight-line rate.

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