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What is the primary purpose of using the straight-line method of depreciation?
What is the primary purpose of using the straight-line method of depreciation?
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What is the primary purpose of using the straight-line method of depreciation?
To allocate the cost of an asset evenly over its useful life
To accelerate the depreciation expense in the early years
To match the depreciation expense with revenue generated
To account for inflation in asset valuation
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The straight-line method allocates the cost of an asset evenly over its useful life, making it simple and widely used.
Questions & Step-by-step Solutions
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Q
Q: What is the primary purpose of using the straight-line method of depreciation?
Solution:
The straight-line method allocates the cost of an asset evenly over its useful life, making it simple and widely used.
Steps: 4
Show Steps
Step 1: Understand that depreciation is a way to spread the cost of an asset over time.
Step 2: Learn that the straight-line method means you divide the total cost of the asset by the number of years it will be used.
Step 3: Realize that this method makes it easy to calculate how much value the asset loses each year.
Step 4: Know that using this method helps businesses plan their finances better by knowing the exact expense each year.
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