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Question
The method of depreciation under which depreciation is calculated on original cost of an asset is known as ____________ .
The method of depreciation under which depreciation is calculated on original cost of an asset is known as ____________ .
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Solution
The correct option is D All of these
Option D is correct. The straight-line method is also known as the Original Cost method and Fixed Installment Method. Under the straight-line method, Depreciation is calculated on the original cost of an asset. That's why it is also known as the original cost method and every year a fixed amount of depreciation is charged from the asset. So it is known as the fixed instalment method.
Option D is correct. The straight-line method is also known as the Original Cost method and Fixed Installment Method. Under the straight-line method, Depreciation is calculated on the original cost of an asset. That's why it is also known as the original cost method and every year a fixed amount of depreciation is charged from the asset. So it is known as the fixed instalment method.
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