Which Is NOT True of Depreciation as Found in the Pro

question 16

Multiple Choice

Which is NOT true of depreciation as found in the pro forma statement?

• A) Depreciation tends to go down each year with the Modified Asset Cost Recovery System (MACRS) -- not up with sales.
• B) Unless there is a change to investments in plant, property and equipment increasing the depreciation line item, using the same percentage as that of the previous year may prove erroneous.
• C) The finance manager should keep constant the pro forma income statement to accommodate for the actual estimate of depreciation for the coming year based on the capital budget of the company.
• D) All of these statements are NOT true.

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