Total depreciation for a house is estimated at $62,000, of which curable physical items total $9,000 and short-lived incurable items $14,000. What is the long-lived incurable share?
Correct Answer
A) $39,000, the remainder after the other two
Why this is correct: In the breakdown method, total depreciation is the sum of depreciation from all categories: Curable Physical + Incurable Short-Lived + Incurable Long-Lived. To find the missing component, subtract the known amounts from the total. $62,000 total - $9,000 curable - $14,000 short-lived incurable = $39,000 long-lived incurable. Why the other choices are wrong: $23,000 is the sum of the two identified items, not the remainder. $53,000 is total less the curable portion, but still includes the short-lived portion. $48,000 is total less the short-lived portion, but still includes the curable portion. Exam tip: Use the equation: Total Depreciation = Curable Physical + Incurable Short-Lived + Incurable Long-Lived. Solve for the unknown.
Why This Is the Correct Answer
Why this is correct: In the breakdown method, total depreciation is the sum of depreciation from all categories: Curable Physical + Incurable Short-Lived + Incurable Long-Lived. To find the missing component, subtract the known amounts from the total. $62,000 total - $9,000 curable - $14,000 short-lived incurable = $39,000 long-lived incurable. Why the other choices are wrong: $23,000 is the sum of the two identified items, not the remainder. $53,000 is total less the curable portion, but still includes the short-lived portion. $48,000 is total less the short-lived portion, but still includes the curable portion. Exam tip: Use the equation: Total Depreciation = Curable Physical + Incurable Short-Lived + Incurable Long-Lived. Solve for the unknown.
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