Question

Straight line method and written down value method are generally used for calculating ____________ amount in practice.

• A. Depreciation
• B. Appreciation
• C. Historical cost
• D. None of the Above

Answer 1

The correct option is A Depreciation

There are two most commonly used method of depreciation i.e., Straight line method and Written down value method.

Under straight line method of depreciation, a fixed and equal amount of depreciation, calculated at a fixed percentage on the original cost of a fixed depreciable asset is written off during each accounting period over the expected useful life of the asset.

Under the written down value method, depreiation calculated at a fixed percentage on the original cost (in the first year) and on the written down value, (in subsequent years) of a fixed depreciable asset is written off during each accounting period over the expected useful life of the asset. Under this method, the rate of depreciation remains constant year after year ehereas the amlount of depreciation goes on decreasing.