Both the Straight-Line Depreciation Method and the Double-Declining-Balance Depreciation Method

question 116

Multiple Choice

Both the straight-line depreciation method and the double-declining-balance depreciation method:

• A)Produce the same total depreciation over an asset's useful life.
• B)Produce the same depreciation expense each year.
• C)Produce the same book value each year.
• D)Are acceptable for tax purposes only.
• E)Are the only acceptable methods of depreciation for financial reporting.

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Definitions:

Original Cost

The initial monetary value of an asset, including the purchase price and any related acquisition costs, but before depreciation or amortization.

Decrease

A reduction or decline in quantity, size, or overall value of an item or entity.

Investing Activity

Transactions involving the purchase and disposal of long-term assets and other investments, not including cash equivalents, part of a company’s cash flow statement.

Other Income

Revenue from non-primary business activities, such as rent, patents, or interest earnings, not related to the company's main business operations.