Question

Explain the meaning of depreciation. Enumerate different methods of depreciation. Explain straight line method.

Answer 1

depreciation means decreased in the value of fixed assets
there are so many methods of depreciation but following are mostly used they are as follows
1 fixed installment method/straight line value method
2 written down value method

Explanation of straight line method

for ex. asset of $10000 (10%dep)
i.e. 1000 is remains constant for every year

Answer 2

Explain the meaning of depreciation. Enumerate different methods of depreciation. Explain straight line method.

• On the asset's initial purchase price, depreciation is applied at a fixed rate. Depreciation is assessed at a specified rate based on the asset's written-down value or declining value. The formula for the straight-line depreciation method is Asset cost divided by residual value over the asset's useful life.
• Because of usage, deterioration, or obsolescence, an asset's monetary value falls with time. Depreciation is used to measure this decline. Other factors, such as poor market conditions, etc., may also contribute to depreciation, or a decline in an asset's value.
• A typical form of depreciation that reduces the value of a fixed asset over the course of its useful life is straight line depreciation. It is employed to lower a fixed asset's carrying amount throughout the course of its useful life. When using straight line depreciation, the cost of an asset is lost over each accounting period by the same amount.
• These five techniques are used by businesses to calculate asset depreciation: straight line, decreasing balance, double-declining balance, units of production, and sum-of-years digits.

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