Question

What are the advantages of reducing the balance method?

Answer 1

The advantages of reducing the balance method or written down value method are as follows:

1. Under this method of depreciation, higher depreciation is calculated in the initial years with matching revenue generated during the initial years. Similarly, when the asset becomes less productive at the end of its useful life, the depreciation charged is less.
2. This method is considered relevant for income tax purposes.

Also read:

• True and False Questions on Depreciation
• What Is Depreciation
• MCQs on Depreciation

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