California Real Estate Practice Exam

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If depreciation is assumed to occur at an even rate, which method of calculating depreciation is being used?

  1. Economic age life method

  2. Straight-line method

  3. Declining balance method

  4. Sum-of-the-years' digits method

The correct answer is: Economic age life method

If depreciation is being calculated at an even rate, the most likely method being used is the straight-line method. This question is based on the assumption that the chosen method is evenly distributing the total depreciation over the useful life of the asset, rather than front-loading or back-loading the depreciation expenses. The other options mentioned (economic age life, declining balance, and sum-of-the-years' digits methods) are all variations that do not result in equal depreciation expenses each year. Therefore, they do not fit the criteria of an even rate of depreciation.

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