Company a Uses an Accelerated Depreciation Method While Company B

question 119

Multiple Choice

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

• A)A smaller fixed asset turnover ratio and a smaller gain on asset disposal.
• B)A larger fixed asset turnover ratio and a larger gain on asset disposal.
• C)A smaller fixed asset turnover ratio and a larger gain on asset disposal.
• D)A larger fixed asset turnover ratio and a smaller gain on asset disposal.

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Definitions:

Materials

Raw substances or components that are used in the production or manufacturing process to create goods or products.

Cost

Cost refers to the monetary value spent to acquire goods or services, including amounts paid for materials, labor, and other inputs required to produce or deliver the item.

Conversion Costs

Expenses incurred when converting raw materials into finished products, including labor and manufacturing overhead.

First Department

Typically the initial stage or department in a production process or sequence.