Depreciation of machines fails under the indirect expenses head. As per income tax regulations, it is calculated by the __________________ method?
Correct answer: C. Diminishing balance
- A. Multiple straight line
- B. Sinking fund
- C. Diminishing balance
- D. Sum of the years digit
Explanation
Under the diminishing-balance method, depreciation is calculated on the machine’s reducing book value, so the annual charge falls over time. This method is also commonly termed the written-down-value or reducing-balance method.
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