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