Delmont Fire Co

Multiple Choice

Delmont Fire Co.purchased identical equipment having an estimated useful life of ten years.Wind Chime uses the straight-line depreciation method and Fire Hut uses the double-declining-balance method of depreciation.Assuming the two entities are similar in all other respects, which of the following statements is correct?

A) Wind Chime's depreciation expense will be greater in the second year than Fire Hut's depreciation expense.
B) Fire Hut's book value will be greater than Wind Chime's book value at the end of year one.
C) Wind Chime's net income will be greater than Fire Hut's net income in year nine.
D) Fire Hut's book value will be less than Wind Chime's book value at the end of year two.