Which of the following is a characteristic of the declining balance method?
Practice Questions
1 question
Q1
Which of the following is a characteristic of the declining balance method?
Depreciation expense is constant each year.
Higher depreciation expense in earlier years.
Lower depreciation expense in earlier years.
No depreciation is recorded.
The declining balance method results in higher depreciation expenses in the earlier years of an asset's life.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following is a characteristic of the declining balance method?
Solution: The declining balance method results in higher depreciation expenses in the earlier years of an asset's life.
Steps: 5
Step 1: Understand what depreciation means. Depreciation is the process of allocating the cost of an asset over its useful life.
Step 2: Learn about the declining balance method. This is a way to calculate depreciation that results in larger expenses in the first few years.
Step 3: Recognize that in the declining balance method, you apply a fixed percentage to the remaining value of the asset each year.
Step 4: Note that because the asset's value decreases each year, the depreciation expense also decreases over time.
Step 5: Conclude that the characteristic of the declining balance method is that it results in higher depreciation expenses in the earlier years of an asset's life.
