Question

In the first year of an asset's life, which of the following methods has the smallest depreciation?

Answer 1

Answer:

d. Straight-line.

Explanation:

Depreciation: Depreciation is an expense indicating a reduction in the value of fixed assets due to tear and wear, obsolescence, usage, time period, etc. It is shown on the income statement debit line. It is a non-cash item not impacting the cash balance.

In the straight-line method, the depreciation expense would be lowest in this method and it remains the same for the remaining useful life

In the double-declining method, the depreciation rate is doubled and contain the highest value

In the sum of the year digit, we sum the useful life like 5 years so we sum 5+4+3+2+1 = 15 years and divide it to the useful life i.e 5

In the composite or group, the depreciation is taken for the group, not for the individual company