Which Statement Concerning Class Life and Recovery Period Is Not

question 6

Multiple Choice

Which statement concerning class life and recovery period is not true?

• A)The class life of an asset and its recovery period under the Alternative Depreciation System (ADS) are generally the same.
• B)Except for very short-lived property, the recovery period of an asset under MACRS is generally less than its class life.
• C)A class life has been assigned by the IRS to each asset to which a recovery period has been assigned.
• D)The class life of an asset is constant, regardless of which straight-line method is used to calculate its depreciation.

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Definitions:

Production

The process by which raw materials are transformed into finished goods through the use of labor, machinery, and processes.

Customization

The process of modifying or building a product, service, or system according to individual or customer requirements.

Installment Sales Contracts

Contracts in which the buyer agrees to pay the purchase price of an asset in several periodic payments.

Revenue Recognition

The principle that dictates the specific conditions under which revenue can be recognized by an entity in its financial statements.