CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

The HVAC system in a commercial office building has a useful life of 20 years and its replacement cost is $80,000. If the system is 15 years old, what is the incurable physical deterioration associated with this short-lived component?

A. $0.
B. $60,000.
C. Insufficient information.
Correct Answer: B

$80,000 x 15/20 = 60,000.

User Contributed Comments 3

User Comment
jjenkins7 Why is this incurable?
sjne09 incurable=(age/life)*(replacement cost-cost of curable phys. deterioration)
davidt87 because 15 years of its life have already been used up. it's a measure of depreciation really
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