Use of straight-line depreciation in comparison to the diminishing-balance method results in
1) a greater amount of depreciation in the earlier years of an asset's useful life.
2) a greater amount of depreciation in the later years of an asset's useful life.
3) an equal amount of depreciation over an asset's total useful life.
A) 1.
B) 2.
C) 3.
D) both 2 and 3.

Question

Quizplus · Accepted Answer

The straight-line method spreads the cost of the asset evenly over its useful life, resulting in equal annual depreciation expenses, whereas the diminishing-balance method results in higher depreciation expenses in the early years and lower expenses in the later years. Over the total useful life of an asset, both methods will depreciate the asset to its salvage value, resulting in an equal total depreciation amount.

Use of Straight-Line Depreciation in Comparison to the Diminishing-Balance Method