Double declining-balance depreciation is used in the first year when straight-line depreciation should be used. This error would cause:

A) the period's net income to be overstated.
B) the period's net income to be understated.
C) the period's end assets to be overstated.
D) None of the above answers are correct.

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life, evenly distributing the depreciation expense each year.

Double Declining-balance

A method of accelerated depreciation where an asset’s value is reduced at double the rate of traditional straight-line depreciation.

Net Income

The resultant profit or loss after all expenses and incomes, including tax expenses have been accounted for, over a period.