CFA® Level 1 Exam | Factors Affecting Depreciation Expense Growth Rate

Factors Affecting Depreciation Expense Growth Rate

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Question

Recent ________ is the biggest external factor that affects the growth rate of the depreciation expense series.

Answers

Explanations

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A. B. C. D.

D

One way to understand this is: depreciation is most acute with new assets; if one has recently invested in new assets (i.e. capital expenditures), one would expect depreciation expense to increase. But know well that capital expenditure may not be only new asset purchase.

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