When depreciation is computed for partial periods under a decreasing charge depreciation method, it is necessary to
A) charge a full year's depreciation to the year of acquisition.
B) determine depreciation expense for the full year and then prorate the expense between the two periods involved.
C) use the straight-line method for the year in which the asset is sold or otherwise disposed of.
D) use a salvage value equal to the first year's partial depreciation charge.

Question

Quizplus · Accepted Answer

Under the decreasing charge depreciation method, the depreciation expense decreases every year. When calculating depreciation for partial periods, the yearly depreciation expense needs to be prorated based on the number of months in each period. Therefore, it is necessary to determine depreciation expense for the full year and then prorate the expense between the two periods involved. This ensures that depreciation is charged accurately and fairly for each period.

When Depreciation Is Computed for Partial Periods Under a Decreasing