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If management wanted to show increasing income over the life of an asset which method of depreciation should they choose?

a. diminishing balance method None of the other answers is correct
b. the method of depreciation will not impact income.
c. units-of-activity method.
d. straight-line method

User RoiHatam
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1 Answer

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Final answer:

Management should choose the straight-line method of depreciation to show increasing income over an asset's life, as it spreads the cost evenly and can lead to higher income in later years.

Step-by-step explanation:

If management wanted to show increasing income over the life of an asset, they should choose the straight-line method of depreciation. This method spreads the cost of the asset evenly over its useful life. By contrast, the diminishing balance method results in higher depreciation expenses in the early years and lower expenses in the later years. The units-of-activity method could result in inconsistent depreciation expense as it is based on the use of the asset, which can fluctuate. Therefore, the straight-line method is most suitable for the goal of showing increasing income as it results in consistent depreciation charges, leading to potentially higher reported income in later years as revenue increases but depreciation remains steady.

User Newbyte
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