Question

The straight-line depreciation method and the double-declining-balance depreciation method: Multiple Choice Are acceptable for tax purposes only. Produce the same book value each year. Are the only acceptable methods of depreciation for financial reporting. Produce the same total depreciation over an asset's useful life. Produce the same depreciation expense each year.

Answer 1

The straight-line depreciation method and the double-declining-balance depreciation method:

Produce the same total depreciation over an asset's useful life.

Step-by-step explanation:

The straight-line and the double-declining-balance depreciation methods are two of the four depreciation methods allowed by US generally accepted accounting principles (GAAP). The other two methods are sum of the years' digit and units of production. The straight-line method is calculated by subtracting the salvage value from the asset's cost and either dividing the depreciable amount by the number of years or applying a fixed rate on the depreciable amount. For the double-declining-balance method, 100% is divided by the number of years of the asset's useful life and then multiplying by 2 to obtain the depreciation rate. Depreciation expense is then calculated on the declining balance until the salvage value is left. This is why they produce the same depreciation over the asset's useful life.