Multiple choice

Directions: Choose the correct option for the given question.

Which of the following depreciation methods doesn't bring the value of asset to zero?

  1. Annuity method

  2. Diminishing value method

  3. Fixed installment method

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Diminishing Value (or Declining Balance) method calculates depreciation as a percentage of the remaining book value each year. Since depreciation is always a percentage of a diminishing balance, the asset value approaches but never reaches zero - the depreciation amount gets progressively smaller each year.

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