Question

A Principal objection to SLM of depreciation is that it ___________.

• A. provides for declining productivity of an asset
• B. ignores variations in the rate of assets use
• C. tends to result in a constant rate of return on a diminishing investment base
• D. ives smaller periodic write offs than decreasing charge method

Answer 1

Answer: (B)

ignores variations in the rate of assets use

Straight line depreciation is the default method used to gradually reduce the carrying amount of a fixed asset over its useful life. The method is designed to reflect the consumption pattern of the underlying asset, and is used when there is no particular pattern to the manner in which the asset is to be used overtime. Use of the straight-line method is highly recommended, since it is the easiest depreciation method to calculate. It ignores variation in the rate of assets use.