Depreciation Account: Diminishing or Reducing Balance Method: Meaning, Formula, And Preparation - SS1 Accounting Past Questions and Answers - page 1
What is the formula for calculating depreciation using the reducing balance method?
Cost of the asset x Depreciation rate
Book value of the asset x Depreciation rate
Cost of the asset / Depreciation rate
Book value of the asset / Depreciation rate
What is the assumption made when using the reducing balance method of depreciation?
The asset depreciates at an equal rate over its useful life
The asset depreciates at a faster rate in the early years of its useful life and at a slower rate in the later years
The asset depreciates at a slower rate in the early years of its useful life and at a faster rate in the later years
The asset has no salvage value at the end of its useful life
How is the book value of the asset calculated using the reducing balance method?
Cost of the asset - Accumulated depreciation
Cost of the asset x Depreciation rate
Accumulated depreciation / Useful life
Depreciation expense x Useful life
What is the purpose of preparing a depreciation schedule using the reducing balance method?
To calculate the cost of the asset
To determine the useful life of the asset
To allocate the cost of the asset over its useful life
To calculate the salvage value of the asset
What is the difference between the straight-line method and the reducing balance method of depreciation?
How is the depreciation rate determined when using the reducing balance method of depreciation?