CHARACTERISTICS OF DEPRECIATION METHODS Below is a common list of depreciation methods and characteristics related to depreciation.

DEPRECIATION METHODS

a. Straight-line depreciation method

b. Declining-balance depreciation method

c. Units-of-production depreciation method when actual units produced increases over the life of the asset.

CHARACTERISTICS

. Allocates the same amount of cost to each period of a depreciable asset’s life.

. Results in depreciation expense that decreases over the life of the asset.

. Results in depreciation expense that increases over the life of the asset.

. Consistent with the matching concept.

. Calculated by multiplying a constant depreciation rate by depreciable cost.

. Calculated by applying a constant depreciation rate to the asset’s book value at the beginning of the period.

. Results in lowest income taxes in early years of the asset’s life.

Required:

Match one or more of the depreciation methods with each characteristic.

Exercise