Question

Which of the following is/are cannot be treated as advantage of fixed instalment method of charging depreciation?

• A. It is a simple and easy method.
• B. It takes into account the effective utilization of the asset.
• C. This method can be applied where asset gets depreciated because of effluxion of time like furniture, equipments, patents, leasehold etc.
• D. All of the above

Answer 1

The correct option is B It takes into account the effective utilization of the asset.

Fixed installment method does not take into consideration the seasonal fluctuations in the use of fixed assets. In this method of Depreciation Equal amount of Depreciation is charged even though the capacity of the machine declines every year.