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as per accounting standards issued by icai depreciation can be charged by following two methods 1)straight line method 2)written down value method
but as per income tax act depreciation is allowed by way of wdv method.
Wiki User
∙ 13y ago
Wiki User
∙ 15y agoThe three choices available for calculating depreciation are straight line method, Units of production method, and double declining balance method. They allocate different amounts of depreciation but they all total the amount of depreciation. Straight Line Method is when an equal amount of depreciation expense is assigned to each period of asset use. Units of production, according to chapter 7, is a fixed amount of depreciation assigned to each unit of output, service, produced by the assets. It is divided by its useful life. Double declining balance method is an accelerated method that writes off a larger amount of the assets cost near the start of its useful life. It computes annual depreciation by multiplying the assets declining book value by percentage.
Wiki User
∙ 9y ago1 – Straight line method
2 – Diminishing balance method
3 – double declining method
4 – Sum of years digit method
Wiki User
∙ 9y ago1
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What is MT and MSL in accounting depreciation method?
MT and MSL are two depreciation methods used in accounting. They are based on the linear method of depreciation.
Which of the following methods of computing depreciation is production based?
Which of the following methods of computing depreciation is production based?A. Straight-line.B. Declining-balance.C. Units-of-activity.D. None of these.Ans: C. Units- of- activity
How is A change in depreciation methods is accounted for?
Prospectively, like changes in accounting estimates
How many depreciation methods used in South Africa?
Type your answer here... Two
What is book depreciation mean?
The depreciation rate for accounting may be different than that of taxation. The depreciation as per books of accounts may often be termed as book depreciation while that calculated under tax law is termed as tax depreciation.
How many methods of calculating depreciation?
Following are different methods of depreciation: 1 - Straight line method 2 - Diminishing balance method 3 - Double declining method 4 - Sum of years method 5 - MACRS
What has the author Alan P Murray written?
Alan P. Murray has written: 'Depreciation' -- subject(s): Depreciation allowances, Law and legislation
What are the advantages of straight line methods?
Straight-line depreciation methods are easy to understand and calculate, providing a constant depreciation expense each year. This method is widely accepted and used by companies for financial reporting purposes, as it provides a systematic and consistent way to allocate the cost of an asset over its useful life. Additionally, straight-line depreciation offers a clear and predictable rate of depreciation, making it easier for businesses to budget and plan for future expenses.
What impact will different depreciation methods have on a companys bottom line?
Different depreciation methods can impact a company's bottom line by affecting the amount of depreciation expense recognized each period. Straight-line method evenly allocates the cost over the asset's useful life, leading to consistent expenses. Accelerated methods like double declining balance result in higher depreciation expenses in the early years which can lower taxable income and increase cash flow. This can impact financial ratios and net income, ultimately affecting the bottom line.
Why is depreciation necessary?
Depreciation is an incentive for investment in equipment. It encourages businesses to buy equipment that will be used to provide employment.Depreciation is effectively a tax credit. It reduces the profits and therefore the taxes due.Depreciation cost is a term used to account for the loss of value in an item over time. There are four methods of depreciation that are approved for use under the generally accepted accounting principles or GAAP. The most commonly used methods are straight-line depreciation, declining balance and percentage of use.
Is it mandatory to deduct depreciation for the purposes of income tax?
Yes, to the degree the law reads your gain will be calculated from the basis of the depreciation taken or should have been taken.
What is book mean?
The depreciation rate for accounting may be different than that of taxation. The depreciation as per books of accounts may often be termed as book depreciation while that calculated under tax law is termed as tax depreciation.
