A company which uses the reducing balance system of depreciation:

Question

Quizplus · Accepted Answer

The reducing balance system of depreciation involves writing off a specific percentage of the asset's residual value over the asset's life. This means that the depreciation cost will vary each year and be higher in the earlier years of the asset's life. Option A is incorrect because the depreciation costs will not be equal every year. Option B is incorrect because nonresidential real estate is typically depreciated over a longer period. Option C is incorrect because land is not a depreciable asset. Option E is incorrect because the company can still expense some of the cost of the asset in the first year, although it will be a smaller amount than in subsequent years.

A Company Which Uses the Reducing Balance System of Depreciation