- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 7. Analysis of Long-Term Assets
- Subject 6. Depreciation Methods
CFA Practice Question
Accumulated depreciation is the result of ______.
B. capitalizing an asset
C. writing off an asset
A. an expense being prepaid
B. capitalizing an asset
C. writing off an asset
Correct Answer: B
Capitalizing an asset means writing off the benefit of the asset over its useful life. This in turn creates depreciation expense and accumulated depreciation.
User Contributed Comments 2
| User | Comment |
|---|---|
| Davidrh | Why is C incorrect? |
| khalifa92 | writing of an asset is decreasing the asset value because of a decrease in current replacement cost |