Question

Which of the following statements is true regarding the calculation of double declining balance?

A) Depreciation decreases each year,
B) Depreciation is a constant amount,
C) Book value decreases linearly,
D) Salvage value is not considered

Answer 1

The correct statement regarding the calculation of double declining balance is that the depreciation is initially positive, steadily decreasing, and becomes negative at the end of the asset's useful life.

Step-by-step explanation:

The correct statement regarding the calculation of double declining balance is option c) Initially positive, steadily decreasing, becoming negative at the end. With double declining balance, the depreciation expense is larger in the earlier years and gradually decreases over time. This results in a negative book value towards the end of the asset's useful life.