Company a Uses an Accelerated Depreciation Method While Company B

question 136

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 correct?

• A)Company A will have higher depreciation expense in the early years,but Company B will have the higher depreciation 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 depreciation 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:

Corporate Veil

A legal concept that separates the identity and responsibilities of a corporation from those of its shareholders, protecting them from personal liability in most cases.

Promoter

An individual or company responsible for organizing and starting a business or enterprise, often involved in its early financing and establishment.

Subscriber

An investor who agrees to purchase stock in a new corporation.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and typically the right to vote on corporate matters.