Which statement 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 is greater at the beginning of the asset's life.
C)Yearly depreciation is the same in each year of the asset's life.
D)Yearly depreciation expense is greater at the end of the asset's life.

Question

Quizplus · Accepted Answer

The reducing balance method charges depreciation at a higher rate in the early years of an asset's life, and then gradually reduces the rate of depreciation over time. This is because the method calculates depreciation based on a percentage of the asset's remaining book value, which decreases over time. As a result, the yearly depreciation expense is higher at the beginning of the asset's life.

Which Statement Best Describes the Way the Reducing Balance Method