D is corrent. The requirement is to determine if accumulated depreciation is debited for the original cost less any residual recovery under composite depreciation or group depreciation. Composite depreciation is the term given to depreciation on a group of heterogeneous assets. Group depreciation is the term given to depreciation on a group of homogeneous assets. The mechanical application of both these methods is similar. All of the assets are recorded in a single asset account and depreciated using a single accumulated depreciation account. The depreciation rate used is an average based on the assets in the group. When an asset is retired, the asset account is credited for the original cost of the item, and the accumulated depreciation account is debited for the original cost less any residual recovery. This procedure is the same for both methods; thus this answer is correct.
A is incorrect. Composite depreciation is the term given to depreciation on a group of heterogeneous assets. Group depreciation is the term given to depreciation on a group of homogeneous assets. The mechanical application of both these methods is similar. All of the assets are recorded in a single asset account and depreciated using a single accumulated depreciation account. The depreciation rate used is an average based on the assets in the group. When an asset is retired, the asset account is credited for the original cost of the item, and the accumulated depreciation account is debited for the original cost less any residual recovery. This procedure is the same for both methods.
B is incorrect. Composite depreciation is the term given to depreciation on a group of heterogeneous assets. Group depreciation is the term given to depreciation on a group of homogeneous assets. The mechanical application of both these methods is similar. All of the assets are recorded in a single asset account and depreciated using a single accumulated depreciation account. The depreciation rate used is an average based on the assets in the group. When an asset is retired, the asset account is credited for the original cost of the item, and the accumulated depreciation account is debited for the original cost less any residual recovery. This procedure is the same for both methods.
C is incorrect. Composite depreciation is the term given to depreciation on a group of heterogeneous assets. Group depreciation is the term given to depreciation on a group of homogeneous assets. The mechanical application of both these methods is similar. All of the assets are recorded in a single asset account and depreciated using a single accumulated depreciation account. The depreciation rate used is an average based on the assets in the group. When an asset is retired, the asset account is credited for the original cost of the item, and the accumulated depreciation account is debited for the original cost less any residual recovery. This procedure is the same for both methods.
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