Question

Which of these uses the equation: dt = B X %

Rate

Straight Line Method

SOYD

Declining Balance

MACRS

Unit of Production

Depreciation Cost

Depletion

% Depletion

Answer 1

Answer: Declining balance method.

Under this method a constant % of depreciation is applied on the beginning book balance of the year.

Other methods:

Straight Line Method--Uses a constant $ amount year to year, calculated as (Cost-Salvage value)lLife in years.

SOYD

MACRS--The % varies with the class of asset and for the same class from year to year

Unit of Production--Is computed as an amount per unit of production (based on estimated production) and the yearly depreciation is the product of the per unit amount and the total units produced.

Depreciation Cost--is the difference between the cost of the asset and its salvage value.

Depletion--Is a per unit estimated rate which is applied to actual resource extracted

% Depletion--is a constant % applied to the total depletable value.