Question

Under which of following method depreciation charged does not declines?

• A. Diminishing balance method.
• B. Annuity method.
• C. Double decline method.
• D. All of the above.

Answer 1

Answer: (B)

Annuity method.

Under Annuity method, the cost of asset is considered as good as an investment. It is assumed, what if the amount business had invested outside the business instead of asset, it would have earned interest.Similarly, depreciation is calculated in such a way that such interest and cost is recovered. Hence, annuity table is referred for annual depreciation calculation.It is uniformly calculated.