Question

Under which of the following method depreciation charged does not decline?

• A. Diminishing balance method.
• B. Sum of year digit method.
• C. Depreciation fund method.
• D. All of the above.

Answer 1

Answer: (C)

Depreciation fund method.

Depreciation fund method is used when business sets aside money for replacement of an asset, when the asset is nearing its useful life. Unlike diminishing balance method and sum of year digit method, depreciation amount does not reduce with the passage of time in case of depreciation fund method.