The answer is to set up separate depreciation profiles for each value model. This is correct because Dynamics 365 Finance uses value models to track an asset’s financial data independently for different reporting purposes; by assigning a unique depreciation profile to each value model, you can calculate fixed assets depreciation differently for tax versus financial reporting, satisfying distinct regulatory and accounting standards. On the MB-920 exam, this concept tests your understanding of the multiple value model framework, often appearing in scenario-based questions where a company needs separate depreciation calculations for tax and financial reporting—a common trap is confusing value models with books, but remember that value models are the primary mechanism for this separation. A helpful memory tip: think “one asset, two value models, each with its own depreciation profile” to keep tax and financial reporting calculations distinct.
MB-920 Describe Dynamics 365 Finance Practice Question
This MB-920 practice question tests your understanding of describe dynamics 365 finance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company is configuring fixed assets in Dynamics 365 Finance. They need to ensure that asset depreciation is calculated differently for tax reporting and financial reporting. Which TWO actions must be taken?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Create multiple value models for the same asset.
In Dynamics 365 Finance, to calculate depreciation differently for tax and financial reporting, you must create multiple value models for the same asset. Each value model can then be assigned a separate depreciation profile, allowing distinct depreciation calculations for each reporting purpose.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✗
Use a single depreciation book for both tax and financial.
Why it's wrong here
Cannot have different methods in one book.
✓
Create multiple value models for the same asset.
Why this is correct
Allows different depreciation methods for tax and financial.
Related concept
Read the scenario before looking for a memorised answer.
✓
Set up separate depreciation profiles for each value model.
Why this is correct
Each value model uses its own depreciation profile.
Related concept
Read the scenario before looking for a memorised answer.
✗
Enable the 'Derived value models' feature.
Why it's wrong here
Used for transferring asset values, not for different methods.
✗
Use a single value model with multiple depreciation profiles.
Why it's wrong here
A value model can only have one depreciation profile.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse value models with depreciation books or think that a single value model can support multiple depreciation profiles, when in fact each value model requires its own dedicated depreciation profile to achieve different calculations.
Detailed technical explanation
How to think about this question
Value models in Dynamics 365 Finance represent different accounting perspectives (e.g., tax, IFRS, GAAP) for the same fixed asset. Each value model can have its own depreciation profile, which defines the method (e.g., straight-line, declining balance) and parameters. This allows an asset to be depreciated using MACRS for tax reporting and straight-line for financial reporting, with separate ledger accounts and posting layers.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Describe Dynamics 365 Finance — This question tests Describe Dynamics 365 Finance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Create multiple value models for the same asset. — In Dynamics 365 Finance, to calculate depreciation differently for tax and financial reporting, you must create multiple value models for the same asset. Each value model can then be assigned a separate depreciation profile, allowing distinct depreciation calculations for each reporting purpose.
What should I do if I get this MB-920 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Question Discussion
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