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Question 1: Eva has purchased a machine for £300,000. She will depreciate it either at 20% on the straight-line basis or at 30% on the reducing-balance basis. Which method will lead to the highest combined profits in the first two years that the machine is owned?
Select one:
a. The choice of depreciation method does not affect the combined profit figures
b. The straight-line basis will lead to the highest combined profits
c. The reducing-balance basis will lead to the highest combined profits
d. Both the straight-line basis at 20% per annum and the reducing-balance basis at 30% per annum will lead to the same combined profit figure for the first two years
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