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It is essential that you should know about depreciation and its methods. While dealing with business, you will come across with different assets which are used to fulfil business needs. The asset comes along with limited life. So, before the life span ends of any asset, it should be disposed. Though the life of asset can be evaluated, but there is certain estimation.
There are different reasons that lead to depreciation:
- Depletion of asset
- Use of asset
- Obsolescence of asset
- Accident of asset
Through our depreciation and its methods assignment help, you will get to know that the value of assets decreases with passing of time. This is known as depreciation where the value decreases. So, depreciation is actually related to wear and tear of asset as it results in decrease of value.
What is meant by depreciable value?
You should understand that the value of asset can never be depreciable. The depreciable value is known to be the value which is acquired once the residual value of asset is subtracted after its life from asset value. Once the value is obtained it is known as the value which is gained once the depreciation is applied.
While gaining depreciation and its methods homework solutions from us, you will understand that the calculation and reporting depends on two different accounting principles:
- Cost principle:
This would require the depreciation expense which is also known as the income statement as well as the asset amount and that gets reported in the balance sheet which is actually based on the cost of asset.
- Matching principle:
This is the principle that would demand asset’s costs to be allocated to the depreciation expense based on any life span of asset.
Methods of depreciation
Here are the methods of depreciation:
- Straight line depreciation:
It is the widely used method where the depreciation amount stays constant every year with the life of asset.
- Unit of production method:
While getting the depreciation and its methods assignment solutions, you will get to know that the depreciation value is acquired through fixed rate of production.
- Double declining method:
In case of double declining method, the straight line depreciation is actually gained in the first year which is doubled and then the amount gets applied to the non-depreciated amount in the next years.
- Sum of the year method:
In this case the depreciation value gets calculated by calculating all years and the expected life of asset and factor in current year.
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