Question

The depreciation during the year ‘n’, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ‘N’ to the

• A. Initial cost
• B. Difference between initial cost and salvage value
• C. Depreciation during the (n-1)\textsuperscript{th} year
• D. Book value at the end of (n-1)\textsuperscript{th} year

Hint:

Diminishing balance method uses the reducing balance (book value) for depreciation calculation each year.

Answer 1

The Correct Option is D

In the diminishing balance method, depreciation is calculated as a fixed percentage of the book value at the end of the previous year.