Question

What is the difference between straight line method and diminishing balance method of charging depreciation ?​

Answer 1

Straight line method :-

The straight-line method of depreciation is the easiest to calculate, and consists of depreciating the value of an asset in equal installments over the cost of its useful life. 


Diminishing balance method of charging depreciation :-

The declining balance method calculates more depreciation expense initially, and uses a percentage of the asset's currentbook value, as opposed to its initial cost. So, the amount of depreciation declines over time, and continues until the salvage value is reached.

Answer 2

Depreciation offers businesses a way to recover the cost of an eligible asset by writing off the expense over the course of the useful life of the asset. The most commonly used method for calculating depreciation under generally accepted accounting principles, or GAAP, is the straight line method.