Question

The following table shows the amount of revenue generated by three different companies over a three year period of time.

Company	Year 1	Year 2	Year 3
Brown Company	30,000	20,000	10,000
Jones Company	20,000	20,000	20,000
Smith Company	35,000	10,000	15,000

Based on this information alone Brown Company should depreciate its long-term assets using

Multiple Choice

• straight-line depreciation.

• double-declining-balance depreciation.

• units-of-production depreciation.

• first-in-first-out depreciation.

Answer 1

Looking at the Brown company revenue over the three years period, the best method
in this case would be double declining balance method because for brown the revenues in the
initial years is higher and it creases significantly in later years. So under double declining method
the depreciation expense will match up with the Revenue.
Thus, Brown Company should depreciate its long-term assets using:
double-declining-balance depreciation.