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8 December, 03:37

Which of the following is not true about depreciation?

a. Depreciation is not a cash flow.

b. To be depreciable, an asset must have a life longer than one year.

c. A 5-year property will generate a regular MACRS-GDS depreciation deductions in six fiscal years.

d. For MACRS-GDS an estimate of the salvage values is required.

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Answers (1)
  1. 8 December, 03:41
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    D) For MACRS-GDS an estimate of the salvage value is required.

    This statement is not true about depreciation

    Explanation:

    The term Depreciation refers to the decrease in the value of an asset over time. It is not a part of cash flow and does not involve any cash. To calculate the depreciation of an asset, it must have a life of more than one year.

    According to this system, the depreciation occurs one year higher than the classified period, for example, a 5-year property will depreciate in 6 years. The aspect which is not considered while calculating the depreciation under MACRS-GDS is the salvage value of the property because it depreciates to zero and the rates sum-up to 100%.

    Therefore, alternative D is not true about depreciation in MACRS-GDS.
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Home » Business » Which of the following is not true about depreciation? a. Depreciation is not a cash flow. b. To be depreciable, an asset must have a life longer than one year. c.
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