Under which method of depreciation does the expense decrease over time?

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Question: Under which method of depreciation does the expense decrease over time?

Options:

Correct Answer: Declining balance method

Solution:

The declining balance method results in higher depreciation expenses in the earlier years, which decreases over time.

Under which method of depreciation does the expense decrease over time?

Under which method of depreciation does the expense decrease over time?

Step 1: Understand what depreciation means. It is the process of allocating the cost of a tangible asset over its useful life.
Step 2: Learn about different methods of depreciation. There are several methods, including straight-line and declining balance.
Step 3: Focus on the declining balance method. This method calculates depreciation based on a fixed percentage of the asset's remaining book value each year.
Step 4: Notice how the expense changes. In the first year, the depreciation expense is high because it is based on the full value of the asset.
Step 5: Realize that as the asset ages, its book value decreases, leading to lower depreciation expenses in subsequent years.
Step 6: Conclude that the declining balance method is the one where the expense decreases over time.

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