Depreciation

[sniper10]

Which combination of depreciation methods and useful life is most conservative in the year a depreciable asset is acquired?
1. Straight line depreciation with a short useful life.
2. Declining balance depreciation with a short useful life.
3. Straight line depreciation with a long useful life.
4. None of the above.

 

[sfagan]

Short useful life is more conservative than long useful life…
And i know low salvage value is more conservative than high salvage value but that isn’t taken into account in this question.
As for which depreciation method is more conservative I would assume declining balance .

 

[Sam24]

In order to be conservative you should realise expenses as early as possible and revenues as late as possible.
DB method with a short useful life gives the earliest recognition of expenses related to depreciation. So the answer is 2

 

[sniper10]

sfagan, Sam24 - u guys rock! Thanks.