Question

Using the Diminishing Balance method, depreciation is accounted using

• A. Depreciation = Rate × Original Cost
• B. Depreciation = (Original Cost - Salvage Value) / Useful Life
• C. Depreciation = Rate × Book Value at beginning of year
• D. Depreciation = Salvage Value × Rate

Answer 1

Answer:

C. Depreciation = Rate × Book Value at beginning of year

SLM (Fixed Installment):

• Depreciation = (Cost – Residual Value) / Useful

  Life

• Asset value becomes zero or residual value at the end of useful life.

WDV (Diminishing Balance):

• Depreciation = Rate × Book Value at beginning of year

• Asset never becomes exactly zero, even after many years.