Monday, February 3, 2014

Depreciation Methods


     Depreciation is a systematic & rational process of distributing the cost of tangible assets over the life of assets.
     Depreciation is a process of allocation of the cost of asset.
     Cost to be allocated = acquisition cot - salvage value.
     Allocated over the estimated useful(Economic) life of assets.
     Allocation method should be systematic & rational. 

     Depreciation methods which are based on time
           Straight line method
           Declining balance method          
           Sum-of-the-years'-digits method

    Depreciation based on use (activity) of the asset

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