Depreciation Method Homework Help
Depreciation can be described as a process of evaluating the decrease in the value of a fixed asset.Six depreciation methods are as follows
- Straight-line depreciation method: In the depreciation method, a company subtracts the recovery value of an asset from that assets purchased price then they divide it by the productive years of the asset to calculate the depreciation. It is the simplest depreciation method.
- Unit of production depreciation method: According to this depreciation method, a business organization should calculate the cost of every produced unit then it should be multiplied by the total number of units that company produced during an accounting period, and you get depreciation expense.
- Hours of service depreciation method: It is the same concept as the unit of production, the only difference is that depreciation expense in hours of service depreciation method looks at the total service hours used in an accounting period.
- Accelerated depreciation method: By using this depreciation method, a company can write off their assets faster than straight line depreciation method and write off their small amount later.
- Sum of the year method: It is the other form of accelerated depreciation method, it means that in the early life of an asset there is more depreciation method than in the straight line depreciation.
- Double-declining balance method: This method doubles the straight line depreciation method of the first year. After that same percentage is applied to the un-depreciated amount in the following years.
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