Wexford Co purchased a new delivery truck at the beginning of 2016 . The truck has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000 . A full year's depreciation expense is to be recorded in 2016 . The truck was driven 20,000 miles during 2016 and 24,000 miles during 2017 . The number of expected miles over five years is 100,000. Refer to information for

Question

Wexford Co Wexford's is comparing the straight-line and double-declining-balance depreciation methods. Of these two methods, which method creates the larger expense and larger tax savings in 2016?
a. Straight-line depreciation creates the larger expense, while double-declining-balance depreciation creates the larger tax savings.
b. Straight-line depreciation creates both the larger expense and the larger tax savings.
c. Double-declining-balance depreciation creates both the larger expense and the larger tax savings.
d. Double-declining-balance depreciation creates the larger expense, while straight-line depreciation creates the larger tax savings.

Answer 1

c