On January 1 Murphy Company acquired a machine with a four-year useful life.Murphy estimates the salvage value of the machine will be equal to ten percent of the acquisition cost.The company is debating between using either the double-declining-balance method or the sum-of-the-years'-digits method of depreciation.Comparing the depreciation expense for the first two years computed using these methods,the depreciation expense for the double-declining-balance method (compared to the sum-of-the-years'-digits method)will match which of the patterns shown below? First Second
Year Year
A) Lower Lower
B) Lower Higher
C) Higher Lower
D) Higher Higher

Question

Quizplus · Accepted Answer

In the first year, the double-declining-balance method results in higher depreciation expense than the sum-of-the-years'-digits method. In the second year, the sum-of-the-years'-digits method results in higher depreciation expense as the double-declining-balance method's expense decreases more rapidly.

On January 1 Murphy Company Acquired a Machine with a Four-Year