Which Statement Relating to the Composite-Rate Depreciation Approach Untrue

question 7

Multiple Choice

Which statement relating to the composite-rate depreciation approach untrue?

• A) It is often used in practice by business entities with many similar assets in the one class.
• B) A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets.
• C) No gain or loss is recognised on the disposal of individual assets within the composite group.
• D) Composite-rate depreciation always uses the straight-line method of depreciation.

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Definitions:

Legal Capital

The minimum amount of capital that a company must maintain as required by law, often set to protect creditors.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument as stated by the issuer.

Legal Significance

Refers to the importance or implications of something within the realm of the law, often determining how legal documents, decisions, or actions are interpreted and enforced.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.