Under ___________ system, the amount of depreciation remains constant every year.

Fixed Instalment

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Reducing Balance

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Insurance Policy

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Annuity

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Solution

The correct option is A Fixed Instalment
Under the 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 a system, depreciation will remain fixed every year.
Below is the example:

Depreciation= Original Cost- Scrap Value
Estimated Life of asset
= Rs.100000 - Rs.20000
----------------------------------
5 years
Depreciation per year will be Rs.16000

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