Cash Flow from Operating Activities-Indirect Method
Under method ...
Question
Under ____________ method depreciation is calculated on book value.
A
Straight Line Method
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B
Double declining method
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C
Reducing balance
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D
Revaluation method
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Solution
The correct option is D Reducing balance There are various methods of charging depreciation on assets. Most commonly used methods are straight line method and reducing balance method.
Under the reducing balance method, depreciation is charged on the book value of the asset every year. Book value is calculated by deducting the depreciation from its original value in the first year. Than the balance of asset account is considered as book value for the next year and so on.