GCEFinancial AccountingDepreciation2024

Which of the following is an advantage of the straight-line method of depreciation over the reducing balance method?

AIt results in lower depreciation charges in the early years of an asset's life
BIt is more appropriate for assets that lose value rapidly at the beginning
CIt is simple to calculate and gives equal charges over the useful life of the assetCORRECT
DIt ensures the book value of the asset never reaches zero
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Why the answer is C, and why the others tempt you.
The straight-line method allocates an equal amount of depreciation each year, making it simple to apply and easy to understand. Option A is a feature of the reducing balance method. Option B also describes the reducing balance method. Option D is incorrect because the straight-line method can reduce the book value to zero (or to residual value) at the end of useful life.
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