California Real Estate Practice Exam

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Prepare for the California Real Estate Exam. Study with flashcards and multiple-choice questions, each question includes hints and explanations. Get ready to ace your exam!

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With the straight-line method of depreciation, how do you calculate the depreciation per year for an improvement value of $120,000 over 35 years?

$3,000
$3,428.57
$4,285.71
$35,000

The correct answer is: $3,000

The straight-line method of depreciation evenly spreads out the depreciation value over the useful life of the asset. In this case, the improvement value of $120,000 is spread out over 35 years, meaning the depreciation per year is $120,000 divided by 35 which equals $3,428.57. This explains why Options B and C are incorrect as they are both higher than the correct answer. Option D is incorrect because it does not take into account the useful life of the asset, which is necessary to determine the annual depreciation.