Depreciation
Depreciation plays a major role in all companies. Accountants need to document how much the assets that a company owns have depreciated over time. Depreciation is a reduction in the value of an asset in time, due to loss of value because of age and shape that something is in. There are three types of depreciation, they are straight-line method, declining balance method, double declining balance method.
Straight-line: provides the same amount of depreciation for each year of the fixed assets life.
Declining balance: involves applying the depreciation rate (%) against the depreciated balance of the fixed asset each year for the life of the asset.
Double declining method: Is similar to both methods, it uses the depreciated balance of the fixed asset each year, however the
depreciation rate is double that of straight-line.
Few ways to get rid of plant assets are trading, discarding and selling.
Straight-line: provides the same amount of depreciation for each year of the fixed assets life.
Declining balance: involves applying the depreciation rate (%) against the depreciated balance of the fixed asset each year for the life of the asset.
Double declining method: Is similar to both methods, it uses the depreciated balance of the fixed asset each year, however the
depreciation rate is double that of straight-line.
Few ways to get rid of plant assets are trading, discarding and selling.