Generally,the unadjusted rate of return should be calculated based on the average investment rather than the amount of the original investment in a depreciable asset such as equipment.

Question

Quizplus · Accepted Answer

The unadjusted rate of return should be based on the average investment over the asset's useful life, as this provides a more accurate representation of the return on investment. Calculating the return based on the original investment amount would not take into account any changes in the investment over time due to maintenance, repair, or replacement.

Generally,the Unadjusted Rate of Return Should Be Calculated Based on the Average