One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:
A)reduces book value below residual value.
B)does not consider the useful life of the asset in the calculation of depreciation.
C)cannot be used for tax purposes.
D)uses book value instead of depreciable cost in the calculation of depreciation.

Question

Quizplus · Accepted Answer

The double-declining-balance method ignores residual value and calculates the period's depreciation at twice the straight-line rate applied to the declining book value of the asset.Because residual value is not included in the formula for the declining-balance method of computing depreciation expense,you must take extra care to ensure that an asset's book value is not depreciated beyond its residual value.Both methods can be used for tax purposes.

One Difference Between the Double-Declining-Balance Method and the Straight-Line Method