Which of the following statements is true when the straight-line method is used to compute depreciation?
A)The carrying value of an asset is a constant amount during the asset's useful life.
B)Accumulated depreciation is a constant amount during the asset's estimated useful life.
C)Depreciation is a constant amount each year.
D)The book value of an asset is an increasing amount during the asset's useful life.

Question

Quizplus · Accepted Answer

When using the straight-line method to compute depreciation, the same amount of depreciation expense is charged each year of the asset's useful life. This means that the carrying value of the asset (cost minus accumulated depreciation) will decrease by a constant amount each year, leading to an eventual zero book value at the end of the asset's useful life. Option A is incorrect because the carrying value of the asset decreases each year, not remain constant. Option B is incorrect because accumulated depreciation increases each year, not remain constant. Option D is incorrect because the book value of an asset decreases each year, not increase.

Which of the Following Statements Is True When the Straight-Line