Accounting for IGCSE & O level - Accounting Procedures (Section 16 - No. 30)
Which method of depreciation generally results in higher depreciation expense in the earlier years of an asset's life?
Straight-line method
Reducing balance method
Revaluation method
All methods provide similar depreciation expenses in the early years.
Explanation
The reducing balance method allocates a higher depreciation expense in the earlier years of an asset's life because it applies the depreciation rate to the asset's book value, which is higher in the initial years.