Which Statement Relating to the Composite-Rate Depreciation Approach Is Not

question 26

Multiple Choice

Which statement relating to the composite-rate depreciation approach is not true?

• A) A single depreciation rate is applied to the average cost of a functional group of assets.
• B) It is only used for items valued at less than $500 each.
• C) The composite rate is applied to the average of the beginning and ending balances in the asset account for the year.
• D) It is often used in practice by business entities with many similar assets in the one class.

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Definitions:

Positive Economics

The scientific study of “what is” among economic relationships.

Normative Economics

Judgments about “what ought to be” in economic matters. Normative economic views cannot be proved false because they are based on value judgments.

Unintended Consequences

Outcomes that are not the ones foreseen or intended by a purposeful action.

Sunspot Activity

Describes the phenomena of magnetic storms on the Sun's surface, manifesting as sunspots, which can affect Earth's magnetic field and thus potentially influence global climate and telecommunications.