Which of the following statements is false? (When DB and switching DV are compar
ID: 2759357 • Letter: W
Question
Which of the following statements is false? (When DB and switching DV are compared, assume that they have the same n and alpha parameters. Assume that SL depreciation has zero salvage value.) Double-declining balance switching to straight-line depreciation defines a book value at the end of the recovery period that is greater than that of straight-line depreciation. Double-declining balance switching to straight-line depreciation defines a lesser book value at the end of the recovery period than double- declining balance depreciation. Double-declining balance switching straight-line depreciation defines a lesser amount of depreciation in the final year than straight-line depreciation. Double-declining balance switching to straight-line depreciation defines an equal amount of depreciation in the first year when compared to double-declining balance depreciation.Explanation / Answer
Answer : Option No 4 is false that Double Declining balance method swiching to stright line depriciation defines an equal amont of depriciation in the first year when compared to DDB depriciation
Explanation to the above answer
The option number 4 is wrong because DDB is Accelerated Depreciation method in which book value at the beginning of each period is multiplied by fixed depreciation rate which is 200% of the SLM rate so in the early period depreciation as per SLM is half of DDB depreciation
The option number 4 is wrong because DDB is Accelerated Depreciation method in which book value at the beginning of each period is multiplied by fixed depreciation rate which is 200% of the SLM rate so in the early period depreciation as per SLM is half of DDB depreciation
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