Final answer:
The correct answer is option a) which states that the straight-line depreciation and the double-declining-balance depreciation methods produce the same total depreciation over an asset's useful life, although they differ in the annual depreciation expense and book value produced each year.
Step-by-step explanation:
The question is related to the methods of depreciation which are used in accounting to allocate the cost of a tangible asset over its useful life. The straight-line depreciation method evenly spreads the cost of the asset over its anticipated life, resulting in the same amount of depreciation expense each year. On the other hand, the double-declining-balance method of depreciation is an accelerated depreciation method that results in higher depreciation expense in the earlier years of an asset's life and lower expense in the later years.
Option a) is the correct answer to the question. Both methods will ultimately result in the same total depreciation over the asset's useful life because they both recognize the full cost of the asset minus any residual value. However, the timing of the expense recognition will differ.
The other options are incorrect because:
- b) These two methods do not produce the same depreciation expense each year.
- c) They do not produce the same book value each year because the depreciation expense varies each year.
- d) This statement is not entirely true; while specific methods may be preferred for tax purposes, each has its place in financial reporting as well.
- e) There are other methods of depreciation, like units-of-production and sum-of-the-years-digits, that are also acceptable for financial reporting.