Question

Define and explain the concept of Depreciation. There are various methods used for
calculating depreciation. Explain any two methods in details put suitable examples.​

Answer 1

Answer:

There are several types of depreciation expense and different formulas for determining the book value of an asset. The most common depreciation methods include:

Straight-line

Double declining balance

Units of production

Sum of years digits

Depreciation expense is used in accounting to allocate the cost of a tangible asset over its useful life. In other words, it is the reduction in the value of an asset that occurs over time due to usage, wear and tear, or obsolescence. The four main depreciation methods mentioned above are explained in detail below.

Answer 2

Answer:

Define and explain the concept of Depreciation.

• The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. ... Machinery, equipment, currency are some examples of assets that are likely to depreciate over a specific period of time.
• Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. ... Depreciating assets helps companies earn revenue from an asset while expensing a portion of its cost each year the asset is in use.

There are various methods used for

calculating depreciation. Explain any two methods in details put suitable examples

• There are three methods for depreciation: straight line, declining balance, sum-of-the-years' digits, and units of production.

• Straight-Line Depreciation.
• Declining Balance Depreciation.
• Sum-of-the-Years' Digits Depreciation.
• Units of Production Depreciation.
• Straight-Line Depreciation
• The straight-line method determines the estimated salvage value (scrap value) of an asset at the end of its life and then subtracts that value from its original cost. The difference is the value that is lost over time during the asset's productive use. That difference is also the total amount of depreciation that must be expensed.

• Declining Balance Depreciation the declining balance method is a type of accelerated depreciation used to write off depreciation costs more quickly and minimize tax exposure. With the declining balance method, management expenses depreciate at an accelerated rate rather than evenly over a scheduled number of years. This method is often used if an asset is expected to have greater utility in its earlier years. This method also helps to create a larger realized gain when the asset is actually sold. Some companies may also use the double-declining balance method, which is an even more aggressive depreciation method for early expense management.