Financial statement effects of depreciation—straight-line versus accelerated methods  Assume that a company chooses an accelera

expense for financial statement reporting purposes for an asset with a five-year life.

Required:
State the effect (higher, lower, no effect) of accelerated depreciation relative to straight-line depreciation on:
(Higher, Lower, or No Effect?)
A. Depreciation expense in the first year
Depreciation expense in the first year would be higher using the accelerated method relative to the s

B. The asset's net book value after two years

The asset's net book value after two years would be lower using the accelerated method relative to th

C. Cash flows from operations (excluding income taxes)

Cash flows from operations would have no effect using the accelerated method relative to the straigh
t a company chooses an accelerated method of calculating depreciation
sset with a five-year life.

r, Lower, or No Effect?)

celerated method relative to the straight-line method.

e accelerated method relative to the straight-line method.

ated method relative to the straight-line method.