Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is correct?
A)Company A will have higher depreciation expense in the early years,but Company B will have the higher depreciation expense towards the end of the asset's useful life.
B)Company A will consistently have higher depreciation expense until residual value is reached.
C)Company B will have higher depreciation expense in the early years,but Company A will have the higher depreciation expense towards the end of the asset's useful life.
D)Company B will consistently have higher depreciation expense until residual value is reached.

Question

Quizplus · Accepted Answer

Accelerated depreciation will be higher than straight-line depreciation in the early years and this will reverse in the later years.

Company a Uses an Accelerated Depreciation Method While Company B