Company A uses an accelerated depreciation method while Company B uses the straight -line method. All other things equal, during the first few years of the asset's use, Company A will show which of the following compared to Company B?
A) Higher asset values and net income.
B) Lower asset values and higher net income.
C) Higher asset values and lower net income.
D) Lower asset values and net income.

Question

Quizplus · Accepted Answer

Accelerated depreciation results in higher depreciation expenses in the early years, leading to lower asset values and lower net income compared to the straight-line method used by Company B.

Company a Uses an Accelerated Depreciation Method While Company B