MB-310 Manage Fixed Assets Practice Question
A legal entity in Dynamics 365 Finance uses a fiscal calendar with 12 monthly periods. A new fixed asset is placed in service on March 18. The asset's value model is configured with a depreciation convention of 'Half year' and a depreciation profile using the Straight line service life method. The asset's service life is 5 years. How will depreciation be calculated for the first fiscal year?
⚠ Common exam trap
Many candidates confuse the Half year convention with Mid month or actual days proration, which would incorrectly allocate depreciation based on the exact placed-in-service date.
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
✓
Half of the annual depreciation amount is taken in the first fiscal year, and the remaining half is taken in the final fiscal year.
The Half year convention in Dynamics 365 Finance assumes an asset is placed in service at the midpoint of the fiscal year, so half of the annual depreciation is recognized in the first year and the remaining half in the final year. This applies regardless of the actual acquisition date, simplifying first-year and last-year calculations for assets using this convention.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Depreciation is prorated based on the number of days from March 18 to the end of the fiscal year.
Why it's wrong here
Prorating based on exact days is characteristic of the Mid month or actual days conventions, not Half year. The Half year convention deliberately ignores the exact placed-in-service date and assumes a mid-year start, simplifying first-year and final-year depreciation to half of the annual amount.
- ✗
No depreciation is taken in the first fiscal year; depreciation begins in the next fiscal year.
Why it's wrong here
Depreciation does not skip the first fiscal year under the Half year convention. The asset begins depreciating in the year it is placed in service, but only for half of the annual amount. Deferring all depreciation to the next year would misstate expenses and is not how the convention operates.
- ✗
A full year of depreciation is taken in the first year, starting from March.
Why it's wrong here
The Half year convention does not take a full year of depreciation in the first year. It takes half of the annual depreciation amount in the first year and half in the final year, regardless of the actual placed-in-service date. Taking a full year would overstate expense and is not how the Half year convention works.
- ✓
Half of the annual depreciation amount is taken in the first fiscal year, and the remaining half is taken in the final fiscal year.
Why this is correct
With the Half year convention, the system assumes the asset was placed in service at the midpoint of the fiscal year, so half of the annual depreciation is allocated to the first year and the remaining half to the final year. This is standard for assets placed in service at any time during the year when this convention is selected.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Microsoft exam blueprint
This MB-310 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MB-310 exam.