Answer-A company uses the Written Down Value (WDV) method to calculate depreciation on its fixed assets. On...

Under the written-down value method, also known as the reducing balance method, a fixed percentage of depreciation is applied to the decreasing value of the asset. each year. Each year, the depreciation is charged on the opening book value of the asset and then reduced by the amount of the depreciation for that year. Consequently, the depreciation amount decreases annually using this approach.

Question

A company uses the Written Down Value (WD

V method to calculate depreciation on its fixed assets. On which of the following value of the fixed asset, will the depreciation be calculated by the company?

A On original cost of purchase

B On residual value expected at end of life

C On book value at the beginning of the year

D On replacement cost of the asset

E On impaired cost of the asset

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