A depreciable asset that cost $100,000 had an estimated useful life of 5 years and estimated residual value of $10,000. What is the first year for which depreciation would be greater under the straight-line method than under the declining-balance method with an acceleration rate of 200%?
A) The first year.
B) The second year.
C) The fourth year.
D) The third year.

Question

Quizplus · Accepted Answer

Under the straight-line method, annual depreciation is constant at $18,000. Under the double declining-balance method, the first-year depreciation is $40,000, the second year is $24,000, and the third year is $14,400. Thus, the straight-line method results in greater depreciation starting in the third year.

A Depreciable Asset That Cost $100,000 Had an Estimated Useful