An organization has a policy of charging depreciation based on the usage of the fixed asset in a fiscal year. You need to configure depreciation according to this policy. Which depreciation method…

Question

Options

• AStraight line service life
• BReducing balance
• CFactor
• DConsumption

• A
  6% (2)
• B
  13% (4)
• C
  3% (1)
• D
  78% (25)

Explanation

If you set up a depreciation profile for fixed assets and you select Consumption in the Method field in the Depreciation profiles form, the fixed assets that are assigned to this depreciation profile are based on the usage of those fixed assets. Not A: When you set up a fixed asset depreciation profile and select Straight line service life in the Method field in the Depreciation profiles form, the assets that have this depreciation profile assigned to them are depreciated based on the total service life of the asset. This generally is the same depreciation amount in each depreciation period. Not B: When you set up a fixed asset depreciation profile and select Reducing balance in the Method field in the Depreciation profiles form, the assets that have this depreciation profile assigned to them are depreciated by the same percentage in each depreciation period. Not C: Factors are the percentages that are used to depreciate assets. When you set up a fixed asset depreciation profile and select Factor in the Method field in the Depreciation profiles form, you can set up progressive, digressive, or straight line depreciation: If you select progressive depreciation, the amount of depreciation increases with each depreciation period. If you select digressive depreciation, the amount of depreciation per period decreases over time. If you select straight line depreciation, the depreciation is the same in each period.

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