Answered: Which one of the following methods…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which one of the following methods charges depreciation at a rate double to the one used in straight line method?

Select one:

a. Straight line method

b. Declining balance method

c. None of the methods

d. Units of activity method

Expert Solution

Step 1

Methods of Depreciation:

Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear, or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.

The three methods of depreciation are:

Straight-line method: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset.

Units-of-activity method: In this method of depreciation, the amount of depreciation is charged based on the unit of production each year.

Double-declining balance method (Accelerated method): In this method of depreciation, the diminishing value of the asset is taken into consideration for determining the depreciation for the succeeding years.

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