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Problem 1: Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?
a) Associating cause and effect
b) Systematic and rational allocation
c) Immediate recognition
d) Partial recognition
Problem 2: A machine with a five-year estimated useful life and an estimated 10% salvage value was acquired on January 1, 2019. The depreciation expense for 2021 using the double-declining balance method would be original cost multiplied by?
a) 90% × 40% × 40%
b) 60% × 60% × 40%
c) 90% × 60% × 40%
d) 40% × 40%
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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