- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 26. Long-lived Assets
- Subject 3. Depreciation Methods
CFA Practice Question
Assume managers want to maximize bonuses, which are based on current net income. Managers should prefer ______.
A. successful efforts rather than full costing of oil & gas drilling
B. expensing research & development costs
C. using straight-line rather than accelerated depreciation for financial statement purposes
User Contributed Comments 3
| User | Comment |
|---|---|
| lagoste | using SL instead of DDB, they will increase bonuses in the early years but will reduce in the later years. if so, I believe it is not correct to affirm that this strategy will maximize bonuses. it works only for the short-term... does anyone agree??? |
| xiong | managers always focus on short-term goals. |
| dblueroom | The question says bonuses are based on current year net income |