Which of the following typically results from using straight-line depreciation in the set of books for shareholders?
A) Net income appears higher during the early periods of depreciation.
B) Less money is paid to the Internal Revenue Service.
C) Financial managers have more funds from operations available.
D) Depreciable assets last for a longer period of time.

Question

Quizplus · Accepted Answer

Straight-line depreciation method results in higher depreciation expenses during the early stages of an asset's life, which lowers the net income, leading to lower taxes. This effect gradually reduces as the asset nears the end of its useful life. Therefore, net income appears higher during the early periods of depreciation.

Which of the Following Typically Results from Using Straight-Line Depreciation