Answer the following questions concerning the choice of depreciation method for

Question

Answer the following questions concerning the choice of depreciation method for an asset that has a 10-year life. Enter the number corresponding to your answer in the box provided. Answer choices may be used once, more than once, or not at all. Be careful with matching questions because carmen randomizes the matches. Thus, if you print out the quiz to work on it and then enter your answers later in the week, it is very likely the order of the matches will be different. Therefore, exercise caution when entering your answers into carmen. Quiz scores will not be adjusted for errors in entering choices.

Question 5 options:

Which depreciation method will show the highest amount of income tax expense in the first year of owning the asset?

Which depreciation method would most likely result in a gain if the asset was sold at the end of the third year of ownership?

Which depreciation method will show the lower book value of the asset at the end of the first year?

1. Straight-line

2. Double-declining

3. unable to determine from information given

Which depreciation method will show the highest amount of income tax expense in the first year of owning the asset?

Which depreciation method would most likely result in a gain if the asset was sold at the end of the third year of ownership?

Which depreciation method will show the lower book value of the asset at the end of the first year?

Explanation / Answer

Which depreciation method will show the highest amount of income tax expense in the first year of owning the asset?

Straight-line

Note : Under straight Line method , depreciation expenses is lower than the Double Declining method depreciation and which would increase Net Income before tax and would result in highest amount of income tax expense in the first year.

Which depreciation method would most likely result in a gain if the asset was sold at the end of the third year of ownership?

unable to determine from information given

Note : most likely result in a gain would be dependent on the sale value , there is a chance of getting gain in  Double-declining but most likely is depend on sale value

Which depreciation method will show the lower book value of the asset at the end of the first year?

Double-declining

Note : Under Double Declining method depreciation expenses is higher in compare to straight line in first year therefore would provide lower book value at the end of 1st year

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