The Straight-Line Depreciation Method and the Double-Declining-Balance Depreciation Method

question 157

Multiple Choice

The straight-line depreciation method and the double-declining-balance depreciation method:

• A)Produce the same total depreciation over an asset's useful life.
• B)Produce the same depreciation expense each year.
• C)Produce the same book value each year.
• D)Are acceptable for tax purposes only.
• E)Are the only acceptable methods of depreciation for financial reporting.

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Definitions:

Variable Expense Per Unit

The cost that varies with each unit produced or sold, affecting the company's total variable expenses directly.

Total Contribution Margin

The difference between total sales revenue and total variable costs, indicating how much revenue is available to cover fixed costs and generate profit.

Contribution Format

An income statement format that differentiates between fixed and variable costs, highlighting the contribution margin.

Net Operating Income

The profit derived from a company's operations after subtracting all operating expenses, excluding taxes and interest.