Method of Providing Depreciation
Method of Providing Depreciation :- there are mainly three methods of charging
depreciation as per AS 10.
1. Straight Line Method:- In this method a fixed Amount is written off during the working life till asset become nil. This method is simple and accurate. This method is also known as fixed Installment method /Original cost method. Lease holds property generally depreciated by fixed installment method.
Cost of Assets-Scrap value
Straight Line Depreciation = ------------------------------------------
2. Reducing Balance Method/ diminishing value method/ written down method:-- Under this method, a fixed percentage of diminishing value of asset is written off each year. Annual charge of depreciation decreases from year to year.3. UNIT OF PRODUCTION METHOD – In this method depreciation is charged on the basis of expected use or unit of production
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