Choose the statement that best describes the way the reducing-balance method charges depreciation.
A) Yearly depreciation is lower at the beginning of the asset's life.
B) Yearly depreciation expense is greater at the end of the asset's life.
C) Yearly depreciation is the same in each year of the asset's life.
D) Yearly depreciation is greater at the beginning of the asset's life.

Question

Quizplus · Accepted Answer

The reducing-balance method charges higher depreciation in the earlier years of the asset's life and decreases the amount of depreciation over time. This is because the depreciation expense is calculated based on the asset's remaining book value, and since the book value reduces each year, the amount of depreciation also reduces. Therefore, yearly depreciation is greater at the beginning of the asset's life.

Choose the Statement That Best Describes the Way the Reducing-Balance