Answered: Which statement is true?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Depreciation expense is $10,000. The straight-line rate is 10%. The asset has a $500 salvage value. Which statement is true?

Group of answer choices

Depreciation expense using units of production is always equal to straight-line depreciation expense

Depreciation expense using double declining balance will use a 20% rate.

Salvage value for determining double declinding balance depreciation expense would be $1000.

Depreciation expense using double declining balance will be $20,000

Expert Solution

Introduction

Depreciation refers to the decrease in the value of a tangible asset over a period of time. There are different causes of depreciation such as wear and tear, obsolescence, change in technology, use of assets, etc.

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