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Basic Question 15 of 19
The depreciable base for straight-line depreciation is ______.
B. cost less salvage value
C. net book value less salvage value
A. cost less accumulated depreciation
B. cost less salvage value
C. net book value less salvage value
User Contributed Comments 4
| User | Comment |
|---|---|
| ange | Not C. net book value = cost - accumulated depreciation. it changes from year to year so cannot be used as the depreciable base which is calculated when the asset is purchased. |
| cong | Depreciation base = purchase cost - estimated salvage value |
| dybacis | I don't understand why C is incorrect if: cost: 110,000 salvage value: 10,000 Useful life: 5 years yr 1: Net book value=110,000 (no depreciation yet) so (110,000 - 10,000)/5=20,000 yr 2: Net book value= 110,000 - 20,000=90,000 so (90,000 - 10,000)/4=20,000 yr 3: Net book value= 110,000 - 40,000=70,000 so (70,000 - 10,000)/3=20,000 etc.. |
| Thediceman | Net book value is the orginal acquisition cost less accumulated depreciation, depletion or amortization, not book value. |
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Learning Outcome Statements
analyze and interpret financial statement disclosures regarding property, plant, and equipment and intangible assets
CFA® 2024 Level I Curriculum, Volume 2, Module 7.