Sung Car purchased new cleaning equipment at the beginning of 2016. The equipment has a cost of $37 000, an estimated life of five years, and an estimated residual value of $7 000. A full year's depreciation expense is to be recorded in 2016. The equipment was used 20 000 hours during 2016 and 24 000 hours during 2017. The number of expected hours over five years is 100 000.

Sung Car is comparing the straight-line and reducing-balance depreciation methods. Of these two methods, which method creates the larger expense and larger tax savings in 2016?

a) Reducing-balance depreciation creates both the larger expense and the larger tax savings

b) Straight-line depreciation creates both the larger expense and the larger tax savings

c) Straight-line depreciation creates the larger expense, while reducing-balance depreciation creates the larger tax savings

d) Reducing-balance depreciation creates the larger expense, while straight-line depreciation creates the larger tax savings