The Straight-Line Method and the Double-Declining-Balance Method of Depreciation

question 151

Multiple Choice

The straight-line method and the double-declining-balance method of depreciation:

• A) Produce the same total depreciation over an asset's useful life.
• B) Allocate an asset's cost in a systematic and rational manner.
• C) Do not produce the same book value each year.
• D) Are both acceptable for GAAP.
• E) All of these answers are correct.

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Definitions:

Significance Level

A threshold in hypothesis testing that determines the probability of rejecting a true null hypothesis, commonly represented by α.

Degrees of Freedom

A concept in statistics that represents the number of independent values or quantities which can be assigned to a statistical distribution.

Categories

Distinct groups or classes into which data or items can be classified.

Chi-square Test

A statistical test used to determine if there is a significant difference between the expected frequencies and the observed frequencies in one or more categories.