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The formula for reducing balance method of depreciation is r = 1 - (S/C)1/n. The r stands for rate of depreciation, n stands for estimated useful life of asset, S stands for residual value after the expiry of useful life, and C stands for the original cost of asset.

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What depreciation is used in companies regarding company cars?

Reducing balance method


What is the different between straight line method and reducing balance method result?

The straight line method calculates the depreciation of an asset for a specific period of time, while reducing balance method calculates the depreciation for a provisional rate of an asset.


What are the advantages of reducing balance method of depreciation?

Main advantage of using reducing balance method is that it uses the high value at start of life of asset while low value in later years when asset is not working at 100% capacity.


How is the straight line depreciation method different from declining balance method?

Under straight line depreciation, fixed amount of depreciation is charged to every year while in declining balance method depreciation percentage remains same but depreciation is charged on remaining balance of asset due to which the amount of depreciation is different in every year.


What is the formula for a straight line depreciation method?

The formula for a straight line depreciation method is the Cost minus the Salvage Value over the Life in Number of Periods which will equal Depreciation.


What is the depreciation method with successive reductions in depreciation over life of asset?

declining - balance


Which depreciation method does not use residual value in calculating the first years depreciation expense?

Declining-Balance


When is the reducing balance method more suitable than the straightline method?

in what circumstances is the reducing balance method more appropriate than the straight line method?


What are the three formulas for depreciation?

Thre formulas for depreciation are a fixed percentage, a straight line, and a declining balance method.


What impact will different depreciation methods have on a companys bottom line?

different deprecition method impact differently on the company's profit. The straightline method of depreciation when used impact differently on the profit and loss than the reducing balance method. How do the two methods differ. different deprecition method impact differently on the company's profit. The straightline method of depreciation when used impact differently on the profit and loss than the reducing balance method. How do the two methods differ.


Sinking fund method for depreciation?

Sinking fund method for depreciation The straight line method has equal annual depreciation for every year. There are other methods which has more depreciation allocated to the earlier years like Written-Down Value (WDV) method in which depreciation is charged at fixed rate (%) on the reducing balance (i.e. cost less depreciation) every year. The sinking fund method allocates more depreciation to the later years. The depreciation for the first year equals the annual deposit needed for a sinking fund to accumulate at the given rate to an amount that equals the depreciation base. For each consecutive year, the annual depreciation equals the annual sinking fund deposit plus the interest earned on the fund up to that year.


Is it depreciation variable cost or fixed cost?

depreciation is classed as a fixed cost when using only the straight line method. reducing balancing method is classed as a variable cost.