Straight-line produces a lower net income than accelerated methods in the earlier years of an asset's life.Straight-line produces a higher net income than accelerated methods in the earlier years of an asset's life.

Question

Quizplus · Accepted Answer

The statement is incorrect. Accelerated methods produce higher net income in the earlier years of an asset's life compared to straight-line. This is because accelerated methods allocate more of the depreciation expense to the earlier years, resulting in higher expenses and lower taxable income, which in turn reduces tax liability and increases net income.

Straight-Line Produces a Lower Net Income Than Accelerated Methods in the Earlier