Which statement relating to the composite-rate depreciation approach untrue?
A) It is often used in practice by business entities with many similar assets in the one class.
B) A single average depreciation rate is applied to the average of the beginning and ending balances of a functional group of assets.
C) No gain or loss is recognised on the disposal of individual assets within the composite group.
D) Composite-rate depreciation always uses the straight-line method of depreciation.

Question

Quizplus · Accepted Answer

The statement "Composite-rate depreciation always uses the straight-line method of depreciation" is false. While the composite-rate depreciation approach can be used with the straight-line method, it can also be applied with other depreciation methods such as declining balance or units of production method.

Which Statement Relating to the Composite-Rate Depreciation Approach Untrue