On January 1, 2013 Dungan Company purchased a car that cost $35,000. The car had an expected useful life of 6 years and a $10,000 salvage value. Based on this information alone:
A)The amount of depreciation expense recognized in 2016 would be greater if Dungan depreciates the car under the straight-line method than if the double declining balance method is used.
B)The total amount of depreciation expense recognized over the six year useful life will be greater under the double declining balance method than the straight-line method.
C)At the end of 2015, the amount in accumulated depreciation account will be less if the double declining balance method is used than it would be if the straight-line method is used.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

In 2016, the 4^th year of the car's 6-year useful life, straight-line depreciation will produce greater depreciation expense. Double-declining balance recognizes greater depreciation expense in the asset's early life, and lower depreciation expense in the asset's later life. The 4^th of 6 years is the later life.

On January 1, 2013 Dungan Company Purchased a Car That