A financial analyst is studying the income statement effect of two alternative depreciation methods for a recently acquired piece of equipment. She gathers the following information about the equipment’s expected production life and use:

Compared with the units-of-production method of depreciation, if the company uses the straight-line method to depreciate the equipment, its net income in Year 1 will most likely be:
A. lower.
B. higher.
C. the same.

Transcribed Image Text:

Units of production Year 1 2,000 Year 2 2,000 Year 3 2,000 Year 4 2,000 Year 5 2,500 Total 10,500