Wind Chime Co

Multiple Choice

Wind Chime Co.and Fire Hut Co.each purchased identical equipment having an estimated useful life of ten years for the same price.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 Year 1 than Fire Hut's depreciation expense.
B) Fire Hut's equipment's book value will be greater than Wind Chime's equipment's book value at the end of Year 1.
C) Wind Chime's net income will be greater than Fire Hut's net income in Year 9.
D) Fire Hut's equipment's book value will be less than Wind Chime's equipment's book value at the end of Year 2.