Annual instalment towards depreciation reduces as rate of interest increases with______________?
Correct answer: A. sinking fund depreciation
- A. sinking fund depreciation
- B. straight line depreciation
- C. reducing balances depreciation
- D. none of the above
Explanation
In the sinking-fund method, interest earned on earlier deposits contributes to the required depreciation fund, so the annual deposit decreases as the interest rate increases. This is unlike straight-line depreciation, which is unaffected by interest.
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