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Which method of depreciation would be most appropriate for a delivery vehicle?

Practice Questions

Q1
Which method of depreciation would be most appropriate for a delivery vehicle?
  1. Straight-line method.
  2. Units of production method.
  3. Declining balance method.
  4. No depreciation needed.

Questions & Step-by-Step Solutions

Which method of depreciation would be most appropriate for a delivery vehicle?
  • Step 1: Understand what depreciation means. Depreciation is how we account for the loss of value of an asset over time.
  • Step 2: Identify the type of asset. In this case, the asset is a delivery vehicle.
  • Step 3: Learn about different methods of depreciation. Common methods include straight-line and declining balance.
  • Step 4: Know that the declining balance method allows for higher depreciation in the early years of an asset's life.
  • Step 5: Recognize that vehicles, like delivery vehicles, tend to lose value quickly when they are new.
  • Step 6: Conclude that the declining balance method is the best choice for a delivery vehicle because it reflects the rapid loss of value.
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