Which of the following statements is true with regard to written down value method of depreciation?i. The rate at which the asset is written off reduces year after year ii. The amount of depreciation provided reduces from year to year iii. The rate of depreciation as well as the amount of depreciation reduce year after year iv. The value of the asset gets reduced to zero over a period of time
Correct answer: C. Only (ii) above
- A. Only (i) above
- B. Both (i) and (ii) above
- C. Only (ii) above
- D. (i),(ii) and (iii) above
Explanation
Under the written-down-value method, the depreciation rate is generally constant, but it is applied to a declining balance, so the depreciation amount falls each year. Therefore only statement (ii) is true; the submitted key is correct.
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Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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