Question

In case of reducing balance method of charging depreciation is charged on the:

• A. Original Cost
• B. Original Cost less Scrap value
• C. Market Value
• D. Written Down value

Answer 1

Answer: (D)

Written Down value

The reducing balance method of depreciation results in declining depreciation charges each accounting period. In other words, more depreciation is charged at the beginning of the asset's lifetime and less is charged towards the end. This can be useful when an asset has higher utility or productivity when it is new.