Question

Under ____________ method, the value of an asset, even if it becomes

obsolete and useless, cannot be reduced to __________.​

Answer 1

ANSWER :

Under Reducing Instalment Method, the value of an asset even if it becomes obsolete and useless, cannit be reduced to zero.

• ❖ Reducing Instalment Method is also known as Diminishing Balance Method or Written Down Value Method or Reducing Balance Method.

• ❖ Under this method, book value of the asset never becomes zero. Some balance, however small, will always remain in the Asset Account.

• ❖ In this method, the depreciation charged on the asset goes on decreasing every year.

• ❖ The amount of depreciation charged is always calculated on the diminishing balance of the asset each year.

• ❖ Reducing Instalment Method is suitable for assets having longer life and more value such as Machinery, Land and Building etc.

Answer 2

Answer :-

• Under Diminishing Balance Method/Reducing Instalment Method/Written Down Value Method, the value of an asset even if it becomes obsolete and useless, cannot be reduced to Zero.

Explanation :-

• Diminishing Balance Method is a method of charging depreciation. Under this method, the value of asset cannot be reduced to zero as some balance always remains in the Asset Account whatever it is small.