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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Definitions:

Rotating Part

A component that moves around a central axis within a machine or device, typically found in motors and generators.

Rotor

The rotating member of an AC machine.

Poles Per Phase

A characteristic of electric machines which indicates the number of magnetic poles in one phase of the machine.

Output Frequency

The frequency of the electrical output signal generated by an oscillator, amplifier, or another electronic device.