Chapter XI
1. What are the two methods of booking depreciation in the ledger? Which method is preferable?
2. Explain and criticize the two methods of handling the depreciation reserve account at the time of the renewal of parts or replacement of the asset.
3. Why are subsidiary records necessary in accounting for a group of assets which are subject to depreciation?
4. Upon what basis are plant assets usually grouped?
5. Name the five headings under which a record of each plant unit should be kept.
6. Discuss the importance of a periodic revision of depreciation rates. Upon what does the frequency of such a revision depend?
7. What is meant by the rate of composite depreciation?
8. Explain, by assuming data from which to work, the two methods of estimating the composite life of a group of assets, and also their composite rate of depreciation.
9. What does a depreciation reserve on the balance sheet show as to the management’s policy in treating plant properties?