Mendips Ltd net profit would be understated if in the first year, the residual value were excluded when determining the depreciation expense using: Straight-line Reducing balance
A) Yes No
B) Yes Yes
C) No No
D) No Yes

Question

Quizplus · Accepted Answer

Excluding the residual value when calculating depreciation expense using the straight-line method would result in a higher depreciation expense, thus understating net profit. However, the reducing balance method does not typically factor in residual value directly in its annual depreciation calculation, so excluding it would not affect the depreciation expense calculated using this method.

Mendips Ltd Net Profit Would Be Understated If in the First