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Amigo company and porter company both bought a new delivery truck on January 1, 2008. Both companies paid exactly the same cost, $30,000, for their respective vehicles. As of December 31, 2011, the net book value of Amigo's truck was less than Porter company's net book value for the same vehicle. Which of the following is an acceptable explanation for the difference in net book value?



A. Both companies elected straight-line depreciation, but Amigo company used longer estimated life
B. Because GAAP specifies rigid guidelines regarding the calculation of depreciation, this situation is not possible.
C. Amigo company is using the straight-line method of depreciation, and Porter Company is using the double-declining balance method of depreciation
D. Amigo company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation

This question is part of Accounting practice final
Asked by Mackenzie_Roman, Last updated: Dec 18, 2019

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Mackenzie_Roman

Mackenzie_Roman

Answered Jul 25, 2019

Amigo company estimated a lower residual value, but both estimated the same useful life and both elected straight-line depreciation
 

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