Which of the following statements is true regarding depreciation expense?
A)Different companies in the same industry always depreciate similar assets by the same methods.
B)A company using the straight-line method will show a smaller book value for assets than if the same company uses the double-declining-balance method.
C)Choosing the double-declining balance method over the straight-line method will produce a greater total depreciation expense over the asset's life.
D)A company should use the depreciation method that best matches expense recognition with the use of the asset.

Question

Quizplus · Accepted Answer

Expense recognition should match as closely as possible the benefit that was derived from the asset in a given period.Total depreciation over an asset's useful life will be the same regardless of the depreciation method.Different companies in the same industry are free to choose whatever depreciation method they see fit.Because double-declining depreciation recognizes greater expense in an asset's early years,the straight-line method will result in higher book value until the asset is fully depreciated,at which time the book values will be equal.

Which of the Following Statements Is True Regarding Depreciation Expense