Which method produces the highest amount of depreciation?

The method that minimizes income taxes in the first year is the double-declining-balance method, which produces the highest depreciation amount for that year.

Which method produces the most depreciation in the early years?

double-declining balance method
The answer is c) double-declining balance method. Double declining balance method is appropriate for assets that generate higher revenues in its early years because this method records higher depreciation expense at its early years, as well, which would match to the amount of revenue earned.

Which of the following will result in higher depreciation expense in the first year of the asset’s life?

Which of the following will result in higher depreciation expense in the first year of the asset’s life? -Short service life and high residual value.

Which method will produce the highest charge to income in Year 1?

(c) The highest charge to income in Year 1 will be produced by Double Declining Balance Method.

What is the formula for calculating straight line depreciation?

If you visualize straight-line depreciation, it would look like this:

1. Straight-line depreciation.
2. To calculate the straight-line depreciation rate for your asset, simply subtract the salvage value from the asset cost to get total depreciation, then divide that by useful life to get annual depreciation:

What is the difference between depreciable cost and depreciation expense?

Accumulated Depreciation vs Depreciation Expense FAQs Depreciation expense is the amount that a company’s assets are depreciated for a single period (e.g, quarter or the year). Accumulated depreciation, on the other hand, is the total amount that a company has depreciated its assets to date.

What is the formula to calculate depreciation expense?

The straight-line formula used to calculate depreciation expense is: (asset’s historical cost – the asset’s estimated salvage value ) / the asset’s useful life.

How do you calculate total depreciation?

Straight-Line Method

1. Subtract the asset’s salvage value from its cost to determine the amount that can be depreciated.
2. Divide this amount by the number of years in the asset’s useful lifespan.
3. Divide by 12 to tell you the monthly depreciation for the asset.

What is the equation of straight-line?

The general equation of a straight line is y = mx + c, where m is the gradient, and y = c is the value where the line cuts the y-axis. This number c is called the intercept on the y-axis. The equation of a straight line with gradient m and intercept c on the y-axis is y = mx + c.

What is an example of straight-line depreciation?

Example of Straight Line Depreciation Purchase cost of $60,000 – estimated salvage value of $10,000 = Depreciable asset cost of $50,000. 1 / 5-year useful life = 20% depreciation rate per year. 20% depreciation rate x $50,000 depreciable asset cost = $10,000 annual depreciation.