Annual depreciation of the plant it proportional to the earning capacity of the plant vide
Correct answer: C. reducing balances depreciation
- A. sinking fund depreciation
- B. straight line depreciation
- C. reducing balances depreciation
- D. none of the above
Explanation
Under reducing-balance depreciation, the annual depreciation is calculated as a fixed percentage of the plant's diminishing book value, so the amount changes with its remaining value or earning capacity.
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