MB-920 Describe Dynamics 365 Finance Practice Question
A service company uses Dynamics 365 Finance to manage fixed assets. They recently acquired a building and want to split the cost between land (non-depreciable) and building (depreciable). How should they set this up?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Create two fixed asset records: one for land with non-depreciable profile, and one for building with depreciable profile
To properly account for the building acquisition, two separate fixed asset records should be created: one for the land with a non-depreciable profile, and one for the building with a depreciable profile. This allows the system to handle the different depreciation treatments correctly. Option A is incorrect because a single record cannot have a non-depreciable portion; manual adjustment would be error-prone. Option C is incorrect because there is no 'Component Depreciation' feature for splitting cost in this way. Option D is incorrect because sub-assets are typically used for components that are also depreciable, not for non-depreciable land.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Create one fixed asset record for the total cost and manually adjust depreciation
Why it's wrong here
The system would depreciate the entire cost, which is incorrect for land.
- ✓
Create two fixed asset records: one for land with non-depreciable profile, and one for building with depreciable profile
Why this is correct
This allows correct depreciation treatment: land is not depreciated, building is depreciated over its useful life.
- ✗
Use the 'Component Depreciation' feature to split the asset
Why it's wrong here
Component depreciation is used for assets with components that have different useful lives, but land is not depreciable.
- ✗
Create a parent asset for the building and a sub-asset for the land
Why it's wrong here
Sub-assets inherit depreciation settings from the parent; land would still be depreciated.
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