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Contrast the effects of the three depreciation methods on (1) depreciation expense, (2) net income, (3) accumulated depreciation, and (4) carrying amount in each of the following: (a) the early years of an asset's life, and (b) over the total life of the asset
Contrast the effects of the three depreciation methods on (1) depreciation expense, (2) net income, (3) accumulated depreciation, and (4) carrying amount in each of the following: (a) the early years of an asset's life, and (b) over the total life of the asset. (1) Depreciation Expense (2) Net Income (a) Early years Straight-line All three result in the same total depreciation expense Constant charge (depreciation expense) to incom Units-of-production Varies with number of units produced Impact on income will vary with the number of ur Diminishing-balance Decreases each year All three result in the same total impact on net in (b) Total life Straight-line, units- of-production, diminishing-balance Same each year Constant charge (depreciation expense) to incom
(2) Net Income (3) Accumulated Depreciation Constant charge (depreciation expense) to income Increases at a variable amount based on number of un Impact on income will vary with the number of units produced Increases at a diminishing amount each year All three result in the same total impact on net income Increases at a variable amount based on number of un Constant charge (depreciation expense) to income Increases by a constant amount each year
(3) Accumulated Depreciation (4) Carrying Amount Increases at a variable amount based on number of units produced Increases at a diminishing amount each year Increases at a variable amount based on number of units produced Increases by a constant amount each year
Expert Solution
| Early Years | Depreciation Expense | Net Income | Accumulated Depreciation | Carrying Amount |
| Straight Line | Same Each Year | Constant Charge depreciation expense to income | Increases constant amount each year | Decreasing Constant amount each year |
| Units of Production | Varies number of units Produced | Impact on Income will vary with number of units produced | Increases at variable amount based on number of years produced | Decreasing with will vary with number of units produced |
| Diminishing Balance | Decreases the year | Increases at diminising amount each year | Increases at diminising amount each year | Decreases at diminising amount each year |
| Total Life | All three result in the same depreciation expense | All three results in the same total impact on income | All three results in same amount at the end of life | All three results in same amount at the end of life |
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