In the Fixed-Percentage-Of-Declining-Balance Depreciation Method,the Book Value of the Asset

question 69

Multiple Choice

In the fixed-percentage-of-declining-balance depreciation method,the book value of the asset is multiplied by:

• A)An increasing depreciation rate.
• B)A constant depreciation rate.
• C)A decreasing depreciation rate.
• D)A rate that changes each year but is determined from a table.

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Definitions:

Compounded Annually

Interest calculation method where interest is added to the principal once a year, leading to an exponential increase.

Compounded Semiannually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done twice a year.

Monthly Compounding

The process of computing interest on an amount where the calculated interest is added to the principal at the end of each month for the purpose of calculating future interest.

Nominal Rate

The stated interest rate of an investment or loan, without taking into account inflation or compounding of interest.