Question

The diminishing-balance method of depreciation produces a(n):________

a. decreasing depreciation expense each period.
b. increasing depreciation expense each period.
c. decreasing percentage rate each period.
d. constant amount of depreciation expense each period.

Answer 1

The diminishing-balance method of depreciation results in a decreasing depreciation expense each period.

Step-by-step explanation:

The diminishing-balance method of depreciation produces a decreasing depreciation expense each period. This method calculates depreciation using a fixed percentage rate, which is applied to the book value of the asset at the start of each accounting period. Depreciation expense is the amount that a company's assets are depreciated for a single period (e.g,, quarter or the year). Accumulated depreciation, on the other hand, is the total amount that a company has depreciated its assets to date. As the book value decreases each year due to depreciation, the expense calculated using the percentage rate also decreases each year.