Depreciation of machines fails under the indirect expenses head. As per income tax regulations, it is calculated by the __________________ method?

Correct answer: A. Diminishing balance

  • A. Diminishing balance
  • B. Sinking fund
  • C. Multiple straight line
  • 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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