A fixed asset with a 5‐year estimated useful life is sold during the second year. How would the use of the straight‐line method of depreciation instead of the double‐declining balance method of depreciation affect the amount of gain or loss on the sale of the fixed asset?

c)        Decrease              Increase

Explanation:

First, the multiple options to the question are as follows

             Gain                      Loss

a)        NO effect              NO effect

b)        No effect              Increase

c)        Decrease              Increase

d)        Increase                Decrease

First, we understand the difference between the two methods, which are straight line method and double declining method. The straight line method uses a single rate/percentage on an annual basis to calculate depreciation while the double declining method uses at least twice the measurement as the straight line method.

Therefore, using the double declining method, when the sales value is higher than the depreciation base means that the higher depreciation used by the double declining method leads to a decrease in gains.

On the contrary, should the sales value be less than the depreciation base, then the double declining method will increase the loss

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.