Question

Under the diminishing balance method, depreciation is calculated on:

• A. Scrap value
• B. On original value
• C. On book value
• D. None of them

Answer 1

Answer: (C)

On book value

In diminishing balance method, depreciation is calculated on book value of the asset at the start of the year instead of principle amount with fixed percentage. In this, the percentage is same but depreciation amount gradually decreases as it is done on book value.

Hence, Option (C) is the correct answer.