Which depreciation method will maximize net income reported to the shareholders in the early years of an asset's life?
A)the straight-line method
B)the double-declining balance method
C)the capitalization method
D)the revenue matching method

Question

Quizplus · Accepted Answer

The straight-line method evenly distributes the cost of the asset over its useful life, resulting in lower depreciation expenses and therefore higher net income in the early years of the asset's life. This method is thus best for maximizing net income reported to shareholders in the early years.

Which Depreciation Method Will Maximize Net Income Reported to the Shareholders