Which Method Can Result in Annual Depreciation Expense Going Up

question 47

Multiple Choice

Which method can result in annual depreciation expense going up and down from period to period?

• A) reducing balance
• B) units-of-production
• C) fair value method
• D) no depreciation method.

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Definitions:

Payback Period

The time it takes for an investment to generate an amount of income or cash flow to recover the cost of the investment, indicating the investment's risk and liquidity.

Annual Cash Inflows

The total amount of money received by a company or individual in a year from various sources, excluding borrowings.

Straight-Line Depreciation

A way to distribute the outlay of a tangible resource over its service life in regular annual contributions.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.