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Which feature distinguishes the reducing-balance method from the straight-line method of depreciation?
AIt spreads the charge equally across every year of the useful life
BIt bases the annual charge on the hours of machine usage in the period
CIt leaves the asset's carrying amount unchanged throughout its life
DIt charges more depreciation in the earlier years of an asset's life
Answer & Solution
Correct answer: D. It charges more depreciation in the earlier years of an asset's life
1. Reducing balance is an accelerated method.
2. It applies a fixed rate to a declining carrying amount, so charges are largest early and fall over time.
3. Equal annual amounts describe straight-line; usage-based charging describes units of production.
4. All methods reduce carrying amount over time, so option C is false.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.5.2 "Declining Balance Method", p.156_
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