Multiple choice

Which of the following is a factor of depreciation?

  1. Cost of assets

  2. Expected Life of assetl

  3. Estimated residual value

  4. all of above
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D Correct answer
Explanation

All three listed items are fundamental factors in calculating depreciation: (1) cost of the asset establishes the depreciable base, (2) useful/expected life determines how many years the cost is spread over, and (3) estimated residual (salvage) value is subtracted from cost to find the total amount to be depreciated. Together, these determine the annual depreciation charge under any method.

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