Which Depreciation Method Will Result in the Most Total Depreciation

question 63

Multiple Choice

Which depreciation method will result in the most total depreciation expense being recognized over a depreciable asset's entire life?

• A)the straight-line method
• B)the double-declining balance method
• C)the activity (units-of-production)method
• D)All three of these methods report the same total depreciation expense over the asset's life.

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Definitions:

Fixed Costs

Costs that do not fluctuate with the level of production or sales activity, such as rent, salaries, and insurance premiums, remaining constant regardless of business volume.

Break-Even

The point at which total revenues equal total costs, leading to neither a profit nor a loss.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, used to cover fixed costs and to generate profit.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.