Asked by Abigail Small on Jul 21, 2024
Verified
Which of the following statements is correct?
A) Companies will change the method of depreciating assets from one year to the next to reflect usage of an asset.
B) Companies can maximize net income in the first year of an asset's life by selecting the double-declining-balance method rather than the straight-line depreciation method.
C) Companies can use one method of depreciation for some of their long-lived productive assets but then use a different method for another group or type of long-lived productive assets.
D) Companies can minimize an asset's book value in the first year of use by selecting the straight-line depreciation method rather than the double-declining-balance method.
Double-Declining-Balance Method
A method of accelerated depreciation which doubles the normal depreciation rate, reducing the value of an asset more quickly.
Net Income
The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.
Straight-Line Depreciation
A method of allocating the cost of a tangible asset over its useful life in a linear fashion.
- Familiarize yourself with the differences, implementations, and repercussions of assorted depreciation approaches on financial documentation.
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Learning Objectives
- Familiarize yourself with the differences, implementations, and repercussions of assorted depreciation approaches on financial documentation.
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