Which of the following statements is true with regard to depreciation expense?
A) Different companies in the same industry always depreciate similar assets by the same methods.
B) A company using straight-line will show a smaller book value for assets than if the same company uses double-declining-balance.
C) Choosing double-declining-balance over straight-line will produce a greater total depreciation expense over the asset's life.
D) Although their opinions may differ, managers should choose the allocation method (straight-line, accelerated, or units-of-production) that best matches expenses with revenues.

Question

Quizplus · Accepted Answer

Managers should choose the allocation method (straight-line, accelerated, or units-of-production) that best matches expenses with revenues. While different companies may use different methods and straight-line may result in a smaller depreciation expense per year, choosing between double-declining-balance and straight-line will depend on the specific circumstances of the company and the asset in question. The key consideration is to match the depreciation expense with the revenue generated by the asset over its useful life.

Which of the Following Statements Is True with Regard to Depreciation