Financial Management of IT Assets
About 5% of the CIS-HAM exam — see all 5 domains.
- Depreciation: Methods include straight-line and declining balance; the depreciation method on the asset defaults from its model. Tracks book value over an asset's useful life.
- TCO (Total Cost of Ownership): purchase + maintenance/support contracts + consumables + disposal, aggregated to understand true lifetime cost.
- Cost center / financial owner assignment supports chargeback and reporting.
- Salvage/residual value and disposal proceeds close out the financial record at retirement/disposal.
- Financials lean on accurate attribute data (cost, PO, contract, dates), which is why Domains 2 and 3 carry the heavy weight.
Sample questions from this domain
Three of the 14 in this domain, with the reasoning. The full set is in the question bank.
What does depreciation represent for a hardware asset?
- A. The drop in an asset's market resale price as newer models are released
- B. The systematic allocation of an asset's cost over its useful life ✓
- C. The salvage value that remains when the asset reaches the end of its life
- D. The total cost of owning an asset, including its support and maintenance
Why: Depreciation is the systematic allocation of an asset's cost across its useful life for financial reporting. It is an accounting allocation, not a measure of market resale price. Salvage value is the estimated residual value at the end of useful life, which depreciation does not go below. Total cost of ownership adds ongoing costs to acquisition; depreciation covers only the allocation of cost.
Which depreciation method allocates an equal expense amount to each period of an asset's useful life?
- A. Units of production
- B. Sum-of-the-years'-digits
- C. Declining balance
- D. Straight-line ✓
Why: Straight-line depreciation spreads cost evenly across each period of useful life. Declining balance and sum-of-the-years'-digits are accelerated methods, and units of production ties expense to usage.
What does Total Cost of Ownership (TCO) for a hardware asset include?
- A. Acquisition cost plus ongoing costs such as support, maintenance, and operation over the asset's life ✓
- B. The purchase price less the salvage value expected at the end of the asset's useful life
- C. The purchase price plus taxes and shipping, recorded once when the asset is received
- D. The accumulated depreciation recorded on the asset from its depreciation effective date up to the current reporting period
Why: TCO sums acquisition plus ongoing costs (support, maintenance, operation, and disposal) across the asset's life. Cost less salvage is the depreciable amount. Purchase price plus taxes and shipping is acquisition cost only. Accumulated depreciation is the cost allocated so far, not ownership cost.