If an asset produces more revenue in its early years, the depreciation method best suited for this asset would be the:
A)expense method.
B)units-of-production method.
C)double-declining balance method.
D)straight-line method.

Question

Quizplus · Accepted Answer

The double-declining balance method front-loads depreciation expense, resulting in higher depreciation expense in the early years of the asset's life. This is because the depreciation is calculated based on a higher percentage of the asset's carrying value in the early years, which better matches the higher revenue generated by the asset during its early years. Therefore, the double-declining balance method is best suited for assets that produce more revenue in their early years.

If an Asset Produces More Revenue in Its Early Years