Although, written down value method is based upon a more realistic assumption, it suffers from some limitations. Give any three such limitations.
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- Limitations of the Written Down Value Method
- Although this method is based upon a more realistic assumption it suffers from the following limitations
- It does not take into consideration the interest on capital invested in the asset.It does not provide for the replacement of the asset on the expiry of its useful
- The formula to obtain the rate of depreciation can be applied only when there is a residual value of the asset.
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