Question

Which statement is true about the straight-line method of depreciation?

a. It is the preferred method for companies expecting to use the asset more in its early years of life.
b. It recognizes expense proportionately with the amount of use of the asset.
c. It is an accelerated method of depreciation.
d. It allocates an equal amount of depreciation to each year the asset is used.

Answer 1

The correct statement is that the straight-line method of depreciation allocates equal depreciation expense each year over the asset's useful life. It is not an accelerated method and does not allocate based on usage.

Step-by-step explanation:

The true statement about the straight-line method of depreciation is that it allocates an equal amount of depreciation to each year the asset is used. This means that the cost of the asset, minus any salvage value, is divided by the estimated useful life of the asset to determine annual depreciation expense. The straight-line method is contrasted with accelerated methods, which allocate more depreciation in the early years of an asset's life.

The correct statement about the straight-line method of depreciation is option d. It allocates an equal amount of depreciation to each year the asset is used.