Delmont Fire Co

question 49

Multiple Choice

Delmont Fire Co.purchased identical equipment having an estimated useful life of ten years.Wind Chime uses the straight-line depreciation method and Fire Hut 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) Wind Chime's depreciation expense will be greater in the second year than Fire Hut's depreciation expense.
• B) Fire Hut's book value will be greater than Wind Chime's book value at the end of year one.
• C) Wind Chime's net income will be greater than Fire Hut's net income in year nine.
• D) Fire Hut's book value will be less than Wind Chime's book value at the end of year two.

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Definitions:

Logical Reasoning

The process of using a rational, systematic series of steps based on sound mathematical procedures and given statements to arrive at a conclusion.

Egocentrism

A developmental phase where an individual is unable to differentiate between their own perspective and that of others, commonly seen in early childhood.

Animism

The belief that natural objects and phenomena are alive, moving around, with sensations and abilities that are humanlike.

Operational Thinking

A cognitive stage in which individuals can perform operations and manipulate symbols internally in a logical fashion.