Falling Leaves Lawn Care This company purchased new excavating equipment at the beginning of 2012.The equipment has a cost of $37,000,an estimated life of 5 years,and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2012.The equipment was used 20,000 hours during 2012 and 24,000 hours during 2013.The number of expected hours over five years is 100,000.
-Refer to Falling Leaves Lawn Care.The company wants to use the depreciation method that will result in the highest depreciation expense for 2012.Which method should be used?

Question

Quizplus · Accepted Answer

The double-declining-balance method will result in the highest depreciation expense for 2012 because it calculates depreciation based on a higher percentage in the early years of an asset's life. This method results in a larger depreciation expense in the earlier years of the asset's life, which decreases over time.

Falling Leaves Lawn Care This Company Purchased New Excavating Equipment