Depreciation Account: Diminishing or Reducing Balance Method: Meaning, Formula, And Preparation - SS1 Accounting Past Questions and Answers - page 1
1
What is the formula for calculating depreciation using the reducing balance method?
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A
Cost of the asset x Depreciation rate
B
Book value of the asset x Depreciation rate
C
Cost of the asset / Depreciation rate
D
Book value of the asset / Depreciation rate
2
What is the assumption made when using the reducing balance method of depreciation?
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A
The asset depreciates at an equal rate over its useful life
B
The asset depreciates at a faster rate in the early years of its useful life and at a slower rate in the later years
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C
The asset depreciates at a slower rate in the early years of its useful life and at a faster rate in the later years
D
The asset has no salvage value at the end of its useful life
3
How is the book value of the asset calculated using the reducing balance method?
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A
Cost of the asset - Accumulated depreciation
B
Cost of the asset x Depreciation rate
C
Accumulated depreciation / Useful life
D
Depreciation expense x Useful life
4
What is the purpose of preparing a depreciation schedule using the reducing balance method?
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A
To calculate the cost of the asset
B
To determine the useful life of the asset
C
To allocate the cost of the asset over its useful life
D
To calculate the salvage value of the asset
5
What is the difference between the straight-line method and the reducing balance method of depreciation?
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6
How is the depreciation rate determined when using the reducing balance method of depreciation?
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