IMANET CMA Exam - Topic 1 Question 53 Discussion

Actual exam question for IMANET's CMA exam

Question #: 53
Topic #: 1

[All CMA Questions]

The tax impact of equipment depreciation affects capital budgeting decisions. Currently, the Modified Accelerated Cost Recovery System (MACRS) is used as the depreciation method for most assets for tax purposes. The MACRS method of depreciation for assets with 3, 5. 7. and 1 0-year recovery periods is most similar to which one of the following depreciation methods used for financial reporting purposes?

AStraight-line.

BUnits-of-production.

CSum-of-the-years'-digits.

D200% declining-balance.

Show Suggested Answer

Suggested Answer: D

MACRS for assets with lives of 10 years or less is based on the 200% declining-balance method of depreciation. Thus, an asset with a 3-year life would have a straight-line rate of 33-113%. or a double- declining-balance rate of 66-2/3%.

by Chanel at Jun 19, 2022, 08:00 AM

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Jerry

4 months ago

Totally agree with Kimberely, declining-balance makes sense!

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Malissa

4 months ago

Wait, are we sure about that? Seems off to me.

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Adaline

4 months ago

Straight-line is way too slow compared to MACRS.

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Kimberely

4 months ago

I think it's most similar to the 200% declining-balance method.

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Nada

4 months ago

MACRS is definitely a faster depreciation method.

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Buck

5 months ago

I recall that MACRS is designed to front-load depreciation, which makes me lean towards the 200% declining-balance option as the best match.

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Johnna

5 months ago

I practiced a question like this before, and I think I chose straight-line, but now I'm second-guessing myself.

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Brice

5 months ago

I’m not entirely sure, but I think the 200% declining-balance method could be similar to MACRS since both allow for larger deductions in the earlier years.

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Launa

5 months ago

I remember studying that MACRS is more accelerated than straight-line, so I think it might be closer to the declining-balance method.

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Gayla

5 months ago

Ah, I remember learning about Microsoft Stream in one of my IT courses. I'm pretty confident I can identify the correct features here. Let me go through the options systematically.

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Benton

5 months ago

I think the purpose of CTI is to make the call management process more efficient, so I'll go with option C.

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Rutha

5 months ago

Okay, let's see. The key here is that we need to redirect the Azure AD sign-in alerts to a new security administrator, not just give them access to view the logs. I'm not sure if the Insights admin role is the right solution for that.

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