Which depreciation method would likely result in the highest expense in the early years of an asset's life?
Practice Questions
1 question
Q1
Which depreciation method would likely result in the highest expense in the early years of an asset's life?
Straight-Line Method
Declining Balance Method
Units of Production Method
None of the Above
The Declining Balance Method results in higher depreciation expenses in the early years compared to the Straight-Line Method.
Questions & Step-by-step Solutions
1 item
Q
Q: Which depreciation method would likely result in the highest expense in the early years of an asset's life?
Solution: The Declining Balance Method results in higher depreciation expenses in the early years compared to the Straight-Line Method.
Steps: 5
Step 1: Understand what depreciation is. Depreciation is the process of allocating the cost of an asset over its useful life.
Step 2: Learn about different depreciation methods. The two common methods are the Straight-Line Method and the Declining Balance Method.
Step 3: Know how the Straight-Line Method works. This method spreads the cost of the asset evenly over its useful life, resulting in the same expense each year.
Step 4: Understand the Declining Balance Method. This method calculates higher depreciation expenses in the early years and lower expenses in later years.
Step 5: Compare the two methods. Since the Declining Balance Method results in higher expenses initially, it is the method that would likely result in the highest expense in the early years.
