Which of the following statements about straight-line depreciation is correct?
A)Straight-line depreciation is the most common method of depreciation used in the U.S.for financial reporting,but is not commonly used for taxes.
B)When the straight-line method is used to compute depreciation,an asset's carrying value remains constant over the life of the asset.
C)Straight-line depreciation is an approved method to allocate the cost of an asset to expense and it serves as a measure of the physical decline in the asset.
D)The straight line method of depreciation results in a straight-line increase of depreciation expense over the life of an asset.

Question

Quizplus · Accepted Answer

The straight-line method is the preferred choice because it is the easiest to use and understand,and it does a good job of matching depreciation expense to revenues when assets are used evenly over their useful lives.Most corporations use the IRS-approved Modified Accelerated Cost Recovery System (MACRS)to calculate depreciation expense for their tax returns.MACRS is similar to the declining-balance method and is applied over relatively short asset lives set by the IRS to yield high tax deductions for depreciation expense in the early years.

Which of the Following Statements About Straight-Line Depreciation Is Correct