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True or False The optimum time to switch depreciation methods from declining balance (DB) to straight-line...

True or False

  1. The optimum time to switch depreciation methods from declining balance (DB) to straight-line (SLN) is the first time the depreciation charge with straight-line (SLN) depreciation is greater than the result if declining balance (DB) were continued.

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Answer #1

Answer: true

Because in SLM method the depreciation calculated is

Assest cost- salvage value÷life of assest in years

In SLM method depreciation amount is same for all years and in declining balance method the depreciation is not same for all years. The depreciation amount in this method decreasing every year compared to previous year.

So the answer depreciation charge is more in SLM method compared to declining balance method irrespective of cost of machine, life of assest and % of depreciation charge.

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