CIPS Exam L4M8 Topic 1 Question 53 Discussion

Actual exam question for CIPS's L4M8 exam

Question #: 53
Topic #: 1

[All L4M8 Questions]

What is depreciation and deterioration?

AExplanation:
When an organization want to purchase an asset, it considers the depreciation and deterioration in the whole life of the asset and how it will be manage.
Depreciation is the reduction in value of a tangible and a fixed asset over time. The purpose of calculating the depreciation of the asset is to give the organization a fair and current view of what the asset is worth at a particular time. Depreciation is a way of converting the cost of an asset into an expense over a period of time. Depreciation is a permanent feature listed against an asset throughout its life time and it based on wear and tear, reduction in performance and reduction in value.
Deterioration is the process of something becoming lower in quality or performance. The longer the asset can last without deteriorating the better value the asset represents.

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by Izetta at Jan 28, 2025, 04:20 PM

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Merissa

3 months ago

I see you candidates are really getting into the spirit of this question. Keep up the witty banter, but don't forget to actually answer it too!

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Queen

2 months ago

Exactly, both are important factors to consider when managing assets.

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Maira

2 months ago

So, depreciation is about the value of the asset, while deterioration is about its quality.

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Juliana

2 months ago

Deterioration is when something becomes lower in quality or performance.

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Valentin

3 months ago

Depreciation is the reduction in value of an asset over time.

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Hana

4 months ago

Ah, the joys of asset management. Depreciation and deterioration, the dynamic duo of keeping things in tip-top shape. Or, you know, the exact opposite of that.

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Glen

2 months ago

It's important to consider both depreciation and deterioration when managing assets.

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Dulce

2 months ago

Deterioration is when something becomes lower in quality or performance.

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Wei

3 months ago

Depreciation is the reduction in value of an asset over time.

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Audra

4 months ago

Depreciation and deterioration, huh? Sounds like my car after a few too many potholes. Maybe I should just trade it in for a hoverboard instead.

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Marla

3 months ago

Lisha: Maybe a hoverboard would be a better option for you then!

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Lisha

3 months ago

User 2: And deterioration is when it starts to perform worse because of wear and tear.

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Dorathy

3 months ago

Kathrine: Maybe we should both consider getting hoverboards instead!

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Margarita

3 months ago

User 1: Yeah, depreciation is like the value of your car going down over time.

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Kathrine

3 months ago

User 2: I know what you mean, my car is starting to show signs of deterioration too.

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Mila

3 months ago

User 1: Yeah, depreciation is like the value of my car going down over time.

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Glendora

4 months ago

Wait, so I have to keep track of both depreciation and deterioration? That's like juggling two balls while walking a tightrope. I'm already sweating just thinking about it.

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