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Under the Written Down Value (WDV) method, depreciation is calculated

1. on market price of the asset
2. on the book value of the asset
3. on original or historical cost of the asset
4. all the above options

Correct answer: on the book value of the asset

Solution

Under the Written Down Value method, depreciation is charged on the asset's book value at the beginning of each year. Since the book value keeps reducing, the depreciation amount also decreases over time. Therefore, the correct answer is the book value of the asset.

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