PRC-1 · Chapter 6 · Question 96 of 100
In periods of rapid technological change, which depreciation method might management choose to best reflect the rapid obsolescence of high-tech assets?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Reducing balance method (or sum-of-digits)
Explanation
Accelerated methods like reducing balance or sum-of-digits charge more depreciation in the early years. This aligns well with high-tech assets that lose their economic value and usefulness very rapidly due to technological obsolescence.
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