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Lucky started a new business last year. Since it was the first year of operation, the business purchased $10,000 in machinery and used the straight-line method for deprecation. Business is booming, so lucky purchased $15000 in equipment during the current year to help meet production demands. Which of the following statements is true regarding the depreciation choices available to lucky.a. The new machinery can be depreciated using the same method or different method than the previously purchased machineryb. IF lucky wants to use a different depreciation method, he must recapture depreciation and change the method used on the prior purchase of machineryc. The new machinery must be depreciated using the same method as the previously purchased machinery

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Answer:

The answer is: A) The new machinery can be depreciated using the same method or different method than the previously purchased machinery

Explanation:

Their is no rule that requires a business to always use the same depreciation method for the assets they purchase.

The most common depreciation methods include:

  • Straight-line.
  • Double declining balance.
  • Units of production.
  • Sum of years digits.

Depending on the asset a business may consider one depreciation method that better suits it, and another depreciation method for their other assets.

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