CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

A company has property, plant and equipment listed at an original cost of $6,000,000. Land worth $1,000,000 is included in this cost. The depreciation expense for the year is $500,000. What is the average life of the firm's fixed assets?
A. 11 years
B. 10 years
C. 12 years
Explanation: The average life can be calculated by dividing the original cost by the depreciation expense. Land should be deducted, as it is not depreciated. The average life is 10 years [($6,000,000 - $1,000,000)/$500,000].

User Contributed Comments 3

User Comment
iceluke land is not depriciated
cahiz84 land is not depreciated cos after 500 years, you still have that portion of land.
todolist good question
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