Question

In Straight Line Method of depreciation, the amount of depreciation remain ___________ every year.

• A. constant
• B. increased
• C. fluctuating
• D. decreased

Answer 1

The correct option is A constant

Under Fixed Installment system, depreciation is charged on the basis of its original cost reducing by the scrap value and dividing the balance value on the estimated life of the asset. In such system, depreciation will remain constant every year.

Below is the example:

Depreciation= Original Cost- Scrap Value

Estimated Life of asset

= Rs.100000 - Rs.20000

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5 years

Depreciation per year will be Rs.16000