03-25-2010, 08:23 PM
Straight line method of depreciation and reducing balance method of depreciation both are commonly used methods of depreciation and permitted by IAS.
Straight-line depreciation results in a constant charge over the useful life if the assets residual value does not change. Which means that it is assumed in this method of depreciation that equal benefit is derived from use of that asset each year.
On the other hand the diminishing balance method results in a decreasing charge
Over the useful life, and it is assumed that the benefit derived from the use of asset is decreased over the period.
Straight-line depreciation results in a constant charge over the useful life if the assets residual value does not change. Which means that it is assumed in this method of depreciation that equal benefit is derived from use of that asset each year.
On the other hand the diminishing balance method results in a decreasing charge
Over the useful life, and it is assumed that the benefit derived from the use of asset is decreased over the period.
