One difference between the double-declining-balance method and the straight-line method is that the double-declining-balance method:
A)takes book value below residual value.
B)does not consider the useful life of the asset in the calculation of amortization.
C)cannot be used for tax purposes.
D)uses book value instead of depreciable cost in the calculation of amortization.

Question

Quizplus · Accepted Answer

The double-declining-balance method uses book value instead of depreciable cost in the calculation of amortization. This results in a higher depreciation expense in the early years of the asset's life, which reflects the higher wear and tear during that period. The straight-line method, on the other hand, divides the depreciable cost by the useful life of the asset to determine the same annual depreciation expense for each year.

One Difference Between the Double-Declining-Balance Method and the Straight-Line Method