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In this method, it is assumed that the property will lose its value by a constant percentage of its value at the beginning of every year. This method is called?(a) Sinking fund method(b) Constant percentage method(c) Straight line method(d) Quantity survey method |
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Answer» The correct choice is (c) Straight line method The best I can explain: In this method a fixed amount of the original cost is deducted every year so that at the end of the utility period only the scrap value is left. Annual depreciation D = Original cost-scrap value/life in year = C-S/n, Where C- original cost, S- scrap value, n-life of the property in years and D- annual depreciation. The book value after the number of years, say N years = original cost – N*D. |
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