What are the different methods of depreciation?

Depreciation relates to a decrease in the value that the asset arises for the period in which it is used. This is a vital accounting concept, because businesses depreciate depreciation of their assets as the cost of tax returns and there are several methods of depreciation. The two most common methods of depreciation are equal depreciation, in which the value reduces the same amount and decreasing depreciation of equilibrium each year, which calculates depreciation as a percentage of equilibrium value of the asset value. Other more complicated methods include double decisions that combine the principles of direct line and declining balance, degradation of activity and similar time methods. The depreciation costs are the amount of the depreciation value in one year. Accumulated depreciation is a total amount of depreciation that has undergone the asset to this point. For example, a business vehicle depreciated for $ 400 in USD (USD) annually has an expenses of $ 400 in the balance sheet every year, but its accumulated depreciation would be $ 400 in the first year, $ 800 inSecond, third.

Direct line depreciation is the simplest of depreciation methods and allows the same amount of depreciation each year. For example, the computer costs $ 1,000 and is to be used for five years. This means that each year will depreciate $ 200, which is achieved by a $ 1,000 distribution by five.

Depreciation with a decrease in balance enables businesses in the first year to buy the most difficult and then falling amount in each following year. This is achieved by determining the percentage of depreciation and use on balance. Using the above example, if the computer depreciation rate were 50 percent, then depreciated $ 500 in the first year, ie 50 percent of $ 1,000, so the balance of $ 500, or $ 1,000 minus $ 500. Next year, the depreciation costs would be $ 250, or 50 percent of the balance of $ 500, and this process would continue until the balance reaches the value of the computer.

The double decreasing depreciation method uses the direct line method to determine the percentage, double, and then the double percentage rate used per decreasing method. Expenditure on depreciation on the basis of expenditure on the amount used by the asset, unlike time, while the sum of the year is achieved by multiplying the original depreciation costs of the asset of a number of fractions based on the sum of the years when the asset will be used. The production units of the production is established by the NAN formula, which takes into account the amount of production created by asset, and a similar method of time unit uses this theory for natural resources, which can be exhausted over time.