CFA Practice Question

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CFA Practice Question

Which depreciation method bases depreciation expense for a given period on actual use?

A. Straight-line method
B. Double-declining-balance method
C. Units-of-production method
Correct Answer: C

The units-of-production method bases depreciation expense on actual use rather than on the amount of time the company used the asset.

User Contributed Comments 2

User Comment
kalps Sum of the years = Cost - salvage X n/x where n is the year starting from 1 and n is the total number of years i.e. less depn in first few years than during the end
anricus Kalps, should be more depreciation in the earlier years not less... refer to notes! This reflects economic reality where assets lose more of their value in the earlier years!
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