There are various accounting forms that depreciation can be calculated. Choose one of the methods and...
There are various accounting forms that depreciation can be calculated. Choose one of the methods and explore when it would be best suited for use. Can a company have several depreciation methods? Why?
Homework Answers
Depreciation is provided in different methods
Examples,
Straight line depreciation method
Written down value method
Double decline method
Sum of year digits method
All rhea depreciation method is basically used according to the asset nature and management discretion
In tax purpose method of depreciation used so that depreciation expense is high can be befitted for tax purpose
Straight line depreciation method:
Straight line depreciation method can be treated as a default method in deprecation calculation part
This method is recognising the carry amount of asset over useful life of the asset
Use of straight-line depreciation method is highly recommended
Easy method to calculate
So, less errors in calculation
Simplicity
Asset can write off completely by the end of useful life
Total depreciation expense is known
Useful asset for lessor value
It has some disadvantages
It does not have a provision for replacement
Interest loss
Yes, company on its own discretion can use different types of depreciation methods to different asset basis of its usage and advantages and disadvantages of various depreciation method s
And all the method of depreciaotn is allowed by FASB
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