Which Statement Relating to the Composite-Rate Depreciation Approach Is Not

question 26

Multiple Choice

Which statement relating to the composite-rate depreciation approach is not true?

• A) A single depreciation rate is applied to the average cost of a functional group of assets.
• B) It is only used for items valued at less than $500 each.
• C) The composite rate is applied to the average of the beginning and ending balances in the asset account for the year.
• D) It is often used in practice by business entities with many similar assets in the one class.

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Definitions:

Federal Income Tax

A tax levied by the federal government on individuals' and businesses' annual earnings, used to fund public services and government obligations.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the taxation rate for each additional dollar earned.

Federal Income Tax

A tax levied by the U.S. federal government on an individual's or entity's annual income.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, representing the tax rate applicable to the highest dollar of an individual's income.