ABC and XYZ Companies Purchased Identical Equipment Having an Estimated

question 3

Multiple Choice

ABC and XYZ Companies purchased identical equipment having an estimated useful life of ten years. ABC uses the straight-line depreciation method and XYZ uses the double-declining-balance method of depreciation. Assuming the two entities are similar in all other respects, which of the following statements is correct?

• A) ABC's depreciation expense will be greater in the second year than XYZ's depreciation expense.
• B) XYZ's book value will be greater than ABC's book value at the end of year one.
• C) ABC's net income will be greater than XYZ's net income in year nine.
• D) XYZ's book value will be less than ABC's book value at the end of year two.

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Definitions:

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involve medical or surgical methods applied to improve health, alleviate symptoms, and treat diseases.

Systematic Desensitization

A behavioral therapy technique aimed at reducing anxiety through gradual exposure to the feared object or situation paired with relaxation exercises.

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