Question

Under sum of year digit method depreciation year by year ________.

• A. increases
• B. decreases
• C. remains constant
• D. none of above

Answer 1

Answer: (B)

decreases

Under sum of year digit method of depreciation, the charge keeps decreasing since the charge depends on the estimated useful life.

The numerator is the number of years left and the denominator is sum of the total number of years.For eg: 5 years of estimated useful life, the denominator would be 1+2+3+4+5=15. The numerator would be 5 in the first year of depreciation,4 in the next year, so on so forth.