One difference between straight-line and double-declining-balance depreciation methods is that: Select one:

A. Straight-line method will fully depreciate the asset more quickly.

B. Double-declining-balance method will fully depreciate the asset more quickly.

C. Income taxes paid will be lower under the double-declining-balance method.

D. Losses on disposal will be lower under the straight-line method.

E. None of the above.

The answer is B.

Explanation:

Let's first take a brief look at what depreciation is.

To put it simply, Depreciation is the allocation of an asset's value over the course of its useful life.

Why do we depreciate? because in accounting, all the expenses related with earning revenue have to be debited against it and while assets generate cash flows, it decreased their value. This is why we depreciate the amount! Furthermore, this depreciation allows the company to get an idea about how and when to replace the asset!

Why there are several ways to do the Depreciation?

This is because the depreciation of an asset should reflect its pattern of usage. Straight-line basis is good for assets that are used constantly over the span of their useful life while double-digit method is useful for assets that are used heavily in their early years and used less in their later years.

Because double-digit method depreciates the asset nearly double the rate than the rate in the other methods, it depreciates the value much faster.