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State the Difference Between Straight Line and Diminishing Balance Method Homework Answers

Accounting Homework Help

Straight line and diminishing balance method are the ways by which depreciation is charged and in the accounting field both these concepts are immensely useful. You can have a tough time finding Difference between Straight Line and Diminishing Balance Method Homework Answers on your own because this topic is very much detailed. So if you are tensed that how you are going to finish your homework on time then the information shared here can be extremely helpful for you.

A brief idea about the Difference between Straight Line and Diminishing Balance Method

Business entities possess a lot of assets that get depreciated with the passage of time due to constant use and it is absolutely necessary that depreciation is accounted for so that correct financial position can be depicted. There can be various methods of providing depreciation and the two most commonly used options in this domain are straight line and diminishing balance method.

Based on the exact requirements, the organization can implement any of these methods but they are different from each other and it is discussed in the following points-

  • In straight line method a fixed amount of depreciation is charged every year as a predetermined percentage of the original cost of the asset but in diminishing balance method the depreciation is charged on the diminished value.
  • In straight line method the amount of depreciation is always going to be fixed but in diminishing balance method it will vary each year.
  • The value of assets will ultimately come to zero in straight line method but it will never be the case in diminishing value method.
  • Straight line method is good for those entities that have assets which require less repairs and the scrap value is also minimal. Diminishing balance method is preferred in cases of those assets which need a lot of repair expenses.

These are some of the main differences and this topic has a lot of other aspects as well. You can really get a headache while searching for Difference between Straight Line and Diminishing Balance Method Homework Answers and that’s why you should look for help.

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