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Do group depreciation and composite depreciation both utilize the straight-line depreciation method?

1) True
2) False

User Anique
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1 Answer

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Final answer:

Group and composite depreciation do not necessarily use the straight-line depreciation method, even though it is common. Companies may choose other methods based on asset usage patterns or financial strategies.

Step-by-step explanation:

The question addresses whether group depreciation and composite depreciation both utilize the straight-line depreciation method. Group depreciation is a method where assets that are similar in nature and have approximately the same useful lives are grouped together and depreciated as a single asset. <>Composite depreciation is a similar concept where assets are grouped together, but they may have different lives and are depreciated as a single portfolio. Although both methods deal with collective assets, they do not necessarily have to use the straight-line method. Depreciation methods can vary based on company policy or the nature of the asset group, but the straight-line method is often preferred due to its simplicity.

Therefore, the answer to the question is False. It's not a requirement for these methods to strictly use the straight-line method, even though it is common practice to do so. Companies might choose other depreciation methods that better match the usage patterns of the assets or other financial consideration.

User Deuian
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