Straight-line method & double declining balance method?

On January 1, 2003 Daugherty Company purchased a truck that cost $20,000. The truck had an expected useful life of 4 years and a $2,000 salvage value. Based on this information alone:











a. The amount of depreciation expense recognized in 2006 would be greater if Daugherty depreciates the asset under the straight-line method than if the double declining balance method is used.





b. The total amount of depreciation expense recognized over the four year useful life will be greater under the double declining balance method than the straight-line method.





c. At the end of 2004, the amount in accumulated depreciation account will be less if the double declining balance method is used than it would be if the straight-line method is used.





d. None of the above statements is true.

Straight-line method %26amp; double declining balance method?
d. none is true
Reply:If using a truck or other vehicle which is expected to accumulate high miles and high maintenance costs. It is far better to lease the vehicle as one cannot anticipate salvage value further down the road.


As the Co has already bought the truck. I would suggest sinking funds in to the truck to last longer than 4 years.


This means that all costs are deductable 100% , with depreciation (Straight Line) and not having to purchase a new truck after 4 years (Save 30K)