Question

Which of the following is/are advantage of Reducing balance method/WDV method?

• A. Under this method it is easy to calculate depreciation rate.
• B. Income tax authorities do not accepts this method
• C. The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.
• D. All of the above

Answer 1

Answer: (C)

The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.

The reducing balance method -- which depreciates assets more ... front-loads more depreciation into the first years of an asset's life. ... Under the reducing balance method, the asset is depreciated at a higher percentage rate than it straight line and 20 percent a year under double declining balance.