A Building Has a 10-Year Useful Life and a Residual

question 233

Multiple Choice

A building has a 10-year useful life and a residual value equal to 10% of the building's original cost.If the double-declining balance method is used,what depreciation rate would be used?

• A) 9%
• B) 10%
• C) 18%
• D) 20%

---

Definitions:

Revolving Credit

A credit line allowing the borrower to use, repay, and reuse funds up to a certain limit.

Guaranteed Line

A credit line that is assured to be available to the borrower by the lender, typically used to ensure liquidity for businesses.

Compensating Balances

Minimum cash balances that a business agrees to maintain in its account as part of a loan agreement, often used to reduce the lender's risk.

Pledging Agreement

An agreement where a borrower pledges an asset as collateral to secure a loan, ensuring the lender can seize the asset if the loan defaults.