Under what conditions would a company most likely adopt the double-declining-balance method for ﬁnancial reporting?
A) They have high technology, robotic equipment in their plant that have a long usable life.
B) They have a ﬂeet of trucks where repair costs increase annually as the ﬂeet ages.
C) They expect the asset to lose its value more rapidly in the ﬁrst few years of its life.
D) They expect the asset to lose its value in a huge portion after some years of its use.

Question

Quizplus · Accepted Answer

The double-declining-balance method is an accelerated depreciation method, meaning it allocates more depreciation expense in the early years of an asset's life and less depreciation in the later years. This method is most appropriate for assets that lose value quickly soon after acquisition, as indicated in option C.

Under What Conditions Would a Company Most Likely Adopt the Double-Declining-Balance