Which of the following are true of the linear method of depreciation?
I. The depreciation is the same every year.
II. The book value falls in a straight line over time.
III. The residual value is taken off the cost before dividing by the useful life.
IV. The book value can fall below the residual value before the useful life ends.

All four: I, II, III and IVCorrect answerYour answerI and II onlyCorrect answerYour answerII and III onlyCorrect answerYour answerI, II and III onlyCorrect answerYour answer

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CorrectNot quiteAnswer D

Correct answer: D

Equal yearly amounts make the book value a straight line, falling from the cost to the residual value.
IV is false: the book value reaches the residual value exactly at the end of the useful life, never below it before.

Concept: What linear depreciation means
Typical timeTypical: 120 s
Your timeYours: —

The rule this testsLinear depreciation

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