Company a Uses an Accelerated Depreciation Method While Company B

question 39

Multiple Choice

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is true?

• A)Company A will have higher depreciation expense in the early years but Company B will have the higher expense towards the end of the asset's useful life.
• B)Company A will consistently have higher depreciation expense until residual value is reached.
• C)Company B will have higher depreciation expense in the early years but Company A will have the higher expense towards the end of the asset's useful life.
• D)Company B will consistently have higher depreciation expense until residual value is reached.

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Definitions:

Exchange Rate

The exchange rate is the value of one currency for the purpose of conversion to another. It expresses how much of one currency is needed to buy a unit of another currency.

Loanable Funds

The money available for borrowing in the financial markets, determined by the savings of households and income not used for consumption or taxes by businesses and governments.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another.

Net Capital

The total value of a company’s or individual's assets minus liabilities, representing the owner's equity or net worth.