Depreciation: 1- Measures the decline in market value of an asset. 2) Measures p

Question

Depreciation:

1- Measures the decline in market value of an asset.

2) Measures physical deterioration of an asset.

3) Is the process of allocating the cost of a plant asset to expense.

4) Is an outflow of cash from the use of a plant asset.

TRUE/FALSE

-The present value of an annuity is equal to the sum of the individual future values for each payment

-The factor for the present value of an annuity at 8% for 10 years is 6.7101. This implies that an annuity of ten $15,000 payments at 8% yields a present value of $2,235.

Explanation / Answer

Depreciation is the process of allocating the cost of a plant asset to expense. False, -The present value of an annuity is equal to the sum of the individual future values for each payment False, The factor for the present value of an annuity at 8% for 10 years is 6.7101. This implies that an annuity of ten $15,000 payments at 8% yields a present value of $2,235.

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