Question

Statement I: - In Straight Line Method, the asset will be completely written off.
Statement II: - In Written Down value Method, the asset will not be completely written off.
(a) Only Statement I is true.
(b) Only Statement II is true.
(c) Both Statements are true.
(d) Both Statements are false.

Answer 1

Answer:

Option (c) Both Statements are true.

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Answer 2

In the Straight Line method, the asset will be completely written off and in the Written Down Value method, the asset will not be completely written off. (Option C)

• A fixed amount is deducted each year throughout the life of the asset in the Straight Line method.
• But in the Written Down Value method, the amount is calculated on the book value and changes every year.
• The amount in SLM remains constant while it keeps on decreasing in WDV method.
• So, the asset is completely written off in SLM but not in the WDV method.