Future Business Leaders of America (FBLA) Agribusiness Practice Test

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Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

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Which factor is NOT used in calculating straight-line depreciation?

Original cost of the asset
Salvage value
Market demand
Useful life of the asset

The correct answer is: Market demand

In calculating straight-line depreciation, the factors involved are directly related to the asset's cost, its expected lifespan, and its projected residual value at the end of that lifespan. The original cost of the asset is essential, as it represents the initial investment made in acquiring the asset. The salvage value is also critical, as it is the estimated amount that the asset can be sold for at the end of its useful life, impacting the total amount to be depreciated. Lastly, the useful life of the asset is needed to determine over how many years the asset's cost will be spread out. Market demand, however, does not influence the calculation of straight-line depreciation. While market demand can affect an asset's selling price and may influence business decisions, it is not a component of the depreciation formula itself. The focus of straight-line depreciation is strictly on the financial aspects concerning the asset's cost, useful life, and salvage value, making it clear why market demand is not a factor in this calculation.