When Computing Depreciation, the Salvage Value Should Be Ignored (Except

question 5

Multiple Choice

When computing depreciation, the salvage value should be ignored (except that a company should not depreciate below it) if a company uses:

• A)the declining-balance method.
• B)the sum-of-the-years'-digits method.
• C)the units-of-output method.
• D)the straight-line method.

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Definitions:

Competitive Industry

An industry where numerous firms compete against each other to sell similar products or services.

Output Level

The quantity of goods or services produced by a company, industry, or economic sector within a given time period.

Economic Rents

Earnings in excess of the minimum necessary to keep a factor of production in its current use, often associated with restricted supply or monopoly power.

Imperfectly Competitive

A market structure where individual firms have some control over the price of their products due to a lack of perfect competition.