Archive | Depreciation

Selection of a Depreciation Method

Let us make in-depth study of the three alternatives for selecting method of depreciation. Selection of method of depreciation is an important point because choice of method plays a vital role on the net income reported by any business enterprise. Selection of method of depreciation depends upon the type and shape of the enterprise, nature of the asset and objective [...]

By |2015-07-15T16:51:54+00:00July 15, 2015|Depreciation|Comments Off on Selection of a Depreciation Method

Methods for Computation of Depreciation: 2 Methods

Read this article to learn about the two methods involved in computation of depreciation. (i) Straight Line Method and Written Down Value Method (WDVM). (ii) Diminishing/Reducing/ Written Down Value Methods. 1. Straight Line or Fixed Installment Method: This method is the simplest and most commonly used method of charging depreciation. Here, the amount of depreciation remains same over the expected [...]

By |2015-07-15T16:51:54+00:00July 15, 2015|Depreciation|Comments Off on Methods for Computation of Depreciation: 2 Methods

Straight Line and Written Down Value Method of Depreciation | Differences

Here we detail about the difference between straight line and written down value method of depreciation. Straight Line Method: 1. Depreciation is calculated on original cost of the asset. 2. Amount of depreciation remains same during the useful life of the asset. 3. Book value of the asset can be reduced to zero or to its scrap value. 4. Not [...]

By |2015-07-15T16:51:54+00:00July 15, 2015|Depreciation|Comments Off on Straight Line and Written Down Value Method of Depreciation | Differences
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