Double-declining-balance method is used in the first year when straight-line should be used.This error would cause:

Question

Quizplus · Accepted Answer

The double-declining-balance method results in higher depreciation expenses in the early years of an asset's life, compared to the straight-line method. If the double-declining-balance method is used when the straight-line method should be used, the depreciation expense in the first year will be overstated. This will result in the period's net income being understated because higher depreciation expenses will be recorded compared to what should have been recorded using the straight-line method. Therefore, the best choice is option B.

Double-Declining-Balance Method Is Used in the First Year When Straight-Line