Which of the following statements is true with regard to depreciation expense? A

ID: 2475911 • Letter: W

Question

Which of the following statements is true with regard to depreciation expense? A company should use the deprecation method that best matches expense recognition with the use of the asset Different companies in the same industry will always deprecate similar assets by the same methods Choosing double declining balance over straight line will produce a greater total depreciation expense over the asset's life A company using straight line will show a smaller book value for assets than if the same company uses double declining balance.

Explanation / Answer

Answer is A) A company should use the depreciation method that best matches expense recognition with the use of the asset.

Others are incorrect because

Different companies in the same industry will always depreciate similar assets by the same methods. - Different Companies use different methods.

Choosing double declining balance over straight line will produce a greater total depreciation expense over the asset's life. - Total Depreciation will remain same in both the cases.Only yearwise depreciation varies.

A company using straight line will show a smaller book value for assets than if the same company uses double declining balance. - False since depreciation as per double declining is higher in the initial years. Thus their book value would be lower

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Which of the following statements is true with regard to depreciation expense? C

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Which of the following statements is true with regard to depreciation expense? A

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