Question

Assume: This is the first year an asset is being depreciated. Which method will show the highest total assets on the year-end balance sheet?

A) Straight-line depreciation
B) Double declining balance depreciation
C) Sum-of-the-years-digits depreciation
D) Units of production depreciation

Answer 1

The straight-line depreciation method will show the highest total assets on the year-end balance sheet for the first year of depreciation.

Step-by-step explanation:

The method that will show the highest total assets on the year-end balance sheet for the first year an asset is being depreciated is the Straight-line depreciation method.

Under the straight-line depreciation method, the asset is depreciated by an equal amount every year over its useful life. This method evenly spreads out the cost of the asset over time and does not take into consideration the asset's usage or productivity.

In contrast, the other depreciation methods mentioned (double declining balance, sum-of-the-years-digits, and units of production) frontload the depreciation expense, which results in lower total assets on the year-end balance sheet.