Get the Difference between Straight Line and Diminishing Balance Method Homework Help:
Accounting and depreciation:
Starting a business needs an appropriate amount of capital and assets. Accounting for the business includes the calculation of profits. The income and expenses are measured and placed in the balance sheet which prepares the financial statement of the month. The study of depreciation is a necessary part of accountancy. The Difference between Straight Line and Diminishing Balance Method Homework Help at myhomeworkhelp.com explains the question thoroughly.
Counting the depreciation:
Every item recognised as the fixed asset in the company is under depreciation. The value of the product slowly reduces with depreciation. It can be a property, plant or equipment on which the depreciation occurs over a period of alifetimemore clearly an economic life. The product is used to earn the income of the business and gradually it loses its working ability. You can study about it better with the Difference between Straight Line and Diminishing Balance Method Homework Help.
Common methods and their explanations:
There are several methods which are used to calculate depreciable cost on the assets. The most commonly used methods are:
1. Straight-Line Method:
In this method a reduction of the Net-Book priceof a valuable item is completed with the same amount after each time. That particular value is decided by dividing the total value of the item by some number of periods and subtracting the balance in the end.
2. Diminishing Balance method:
In this method the value of the asset is reduced from the Net-Book value by the same percentage at the end of every period. In each period, the percentage is applied on the previous period’s balance value.
But only getting the definition will not justify the Difference between Straight Line and Diminishing Balance Method Assignment Help. A complete explanation is required. Here are some vital points on both the Straight-Line and Diminishing balance Methods:
1. Explaining the Straight-Line Method:
A. The main reason behind accepting the Straight-Line method is the common consideration that every asset has participated in the productive activities in the business and with accordance to that it has transferred its value with depreciation cost.
B. It is the most economical method used to calculate and record the depreciation value in the accounting books.
C. There are some intangible assets on which Straight-Line method is considered to be most accurate.
D. The simple calculating ways in this method makes it a preferable choice among the accountants, economists and analysts.
2. Explanation of Diminishing Balance Method:
When considering this method, the most common approach is made on the machinery which is most productive onthe earlier periods of its life. The same amount of depreciation cost applied in straight-line method will diminish its value more quickly and that is why diminishing balance method is perfect in these sections.
1. This method works on most of the tangible assets used in the business.
2. This method is quite tricky and so a caution should be maintained before applying it.
3. You can study even further with the Difference between Straight Line and Diminishing Balance Method Homework Help at myhomeworkhelp.com.
4. The difference between these two methods is quite commonly used in the assignments of accountancy. Difference between Straight Line and Diminishing Balance Method Assignment Help will guide you in this matter.
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