Q.Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older.

When repairs increase as an asset grows older, the Reducing balance method is efficient — option (b).

Why reducing balance (WDV)?

• The reducing balance / written down value method charges depreciation at a fixed percentage on the diminishing book value, so the depreciation amount is large in early years and small in later years.
• Repairs and maintenance behave the opposite way — they are small when the asset is new and grow larger as it ages.
• Combined, the two roughly offset each other, giving an approximately uniform total charge (depreciation + repairs) to the Profit & Loss Account each year. This even burden on profits is the practical merit of the method.

Why not the others? …