PRC-1 · Chapter 6 · Question 46 of 100
Which depreciation method naturally results in a higher tax deduction (and lower taxable profit) in the EARLY years of an asset's life?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Reducing balance method
Explanation
The reducing balance method (an accelerated depreciation method) calculates a higher depreciation expense in the early years of an asset's life, reducing reported profit more heavily during those years.
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