GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Annuity Method
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Insurance Policy method
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Fixed installment method
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Sum of the years digit method
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Detailed explanation-1: -Sum-of-the-years’ digits is an accelerated method for determining an asset’s expected depreciation over time. Depreciation is an accounting technique that involves pairing the cost of using a tangible asset with the advantage gained over its useful life.
Detailed explanation-2: -Accelerated depreciation is a method used to calculate asset value over time. It’s based on the principle that an asset’s value is highest at the beginning of its lifespan, allowing for more significant depreciation in value during these first few years.
Detailed explanation-3: -The sum of years digits with a switch to straight line is a formula in which sum of years digits is used for the first portion of an asset’s life, then LN switches to the straight line formula to depreciate the asset to its salvage value based on its remaining life.