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Depreciation

What type of depreciation charges does declining balance produce?



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The correct answer is the negative geometric series.


The depreciation (assumed to be following the written down value method) charges change in a geometric series/exponential manner. The depreciation is calculated on the remaining amount after reducing depreciation of the past time period. Since the declining balance leaves us with lesser value, it produces negative geometric series. This means as we move ahead, the depreciation value/amount reduces.


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