Depreciation Q&A

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

Test your knowledge of depreciation by answering the 10 short questions given below. We recommend attempting to answer each question yourself before revealing the answer.

If you find these questions challenging, read our article on depreciation to learn more and get to grips with this important accounting topic.

1. Define depreciation.

2. State three objectives of providing depreciation.

3. What methods are available for calculating depreciation?

4. What is scrap value?

5. What is depletion?

6. What is amortization?

7. What are tangible plant assets?

8. What are intangible assets?

9. What is the original cost method of depreciation?

10. Explain the diminishing balance method of depreciation.

Frequently Asked Questions

What is Depreciation?

Depreciation is the process of allocating the cost of an asset over its useful life. The objective of Depreciation accounting is to match the expense of using an asset against its revenue.

What is the difference between Depreciation and amortization?

There are many different ways to calculate Depreciation, but the most common approach is the straight-line Depreciation method. Under this approach, the cost of an asset is divided by its estimated useful life to come up with a Depreciation expense per year.

What is the difference between Depreciation and amortization?

What is the difference between Depreciation and amortization?

Are there any special Depreciation rules for taxes?

Yes, the IRS has several special Depreciation rules for businesses. These include bonus Depreciation, which allows businesses to take a larger deduction in the year an asset is placed into service, and Section 179 Depreciation, which allows businesses to deduct the total cost of certain types of assets in the year they are purchased.

What are some common Depreciation methods?

The most common Depreciation methods are the straight-line Depreciation method, the accelerated Depreciation method, and the declining balance Depreciation method.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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