# Accounting for Depreciation

Accounting for depreciation is that company has to mention any wear & tear in the asset during the whole year. Accounting for depreciation is necessary as depreciation occurs on all fixed assets which are in operation. Accounting for depreciation also shows that how much time that a specific asset is used by the company.

## Units of Production Depreciation

Units of Production Depreciation The units of production method of depreciation calculate depreciation by using the concept that the depreciation expense of fixed asset is directly proportional to the usage of the asset. This means that the depreciation expense will be more if the

## Sum of Year‘s Digit Depreciation Method

This is the method of calculating the acceleration of depreciation that means that how fast an asset is being depreciated. With the help of this method most of the depreciation of the asset is recognized in the first few years of the useful life

## Unit of Production Depreciation

This is a method of calculating depreciation in which depreciation is calculated on the biases of fixed rate on per unit of the product produce in production line. This method of depreciation can be used to find out the depreciation of the machinery and

## Impact of using different types of Depreciation Methods

There are different types of depreciation methods such as straight line depreciation, reducing balance depreciation, sum of the year digit depreciation and units of activity depreciation. Each method has its own impact and individual pros and cons. In straight line method of depreciation the

## Sum of the Years’ Digits Method of Depreciation

Sum of the Years’ Digits Method of Depreciation: Learning Objectives: Explain the sum of the years’ digits method of depreciation. Definition and Explanation: Sum of the Years’ Digits Method an accelerated method of depreciation which is also based on the assumption that the loss

## Diminishing Balance Method of Depreciation

Diminishing Balance Method of Depreciation: Learning Objectives: Define, explain and give example of the diminishing balance method/written down value method/reducing installment method? What are advantages and disadvantages of diminishing balance method? Definition and Explanation: Diminishing balance method is also known as written down value

## Need for Depreciation

Need for Depreciation: Learning Objectives: Why does the need for calculating and charging depreciation arise. The Need for depreciation arises for the following reasons: Ascertainment of True Profit or Loss: Depreciation is a loss. So Unless it is considered like all other expenses and

## Difference Between Depreciation and Fluctuation

Difference Between Depreciation and Fluctuation: Learning Objectives: What is the difference between depreciation and fluctuation?. Depreciation of asset and fluctuation in its market value are not the same. For example, a businessman purchase a machine the life of which is estimated at 10 years

## Depreciation Accounting – General Questions and Answers

Depreciation Accounting – General Questions and Answers: Learning Objectives: Answers of some of the general questions about depreciation accounting. Theoretical: What is depreciation and how is it brought about? Name the different methods of providing for depreciation, and discuss any one of them in

## Depreciation of Various Assets

Depreciation of Various Assets: Learning Objectives: How should the depreciation on various assets be calculated?. We discuss below the problem of depreciating some given assets. Freehold Land and Building: It means that land and building which has been purchased out right and not on

## Depreciation Methods

Depreciation Methods: Learning Objectives: What are the various methods for depreciation? Fixed assets differ from each other in their nature so widely that the same depreciation methods cannot be applied to each. The following methods have therefore been evolved for depreciating various assets: Fixed

## Depreciation Fund Method or Sinking Fund Method of Depreciation

Depreciation Fund Method or Sinking Fund Method of Depreciation: Learning Objectives: What is depreciation fund method or sinking fund method of depreciation? What are its advantages and disadvantages? Definition and Explanation: Depreciation fund method is also know as sinking fund method or amortization fund

## Depreciation, Depletion and Amortization

Depreciation, Depletion and Amortization: Learning Objectives: What is the difference among depreciation, depletion, and amortization. Depreciation: The term depreciation is used with reference to tangible fixed assets because the permanent continuing and gradual fall in book value is possible only in the case of

## Depletion Method of Depreciation

Depletion Method of Depreciation: Learning Objectives: What is depletion method of depreciation? Explain with example. Depletion method of depreciation is especially suited to mines, quarries, sand pits, etc. According to it the cost of the asset is divided by the total workable deposits. In

## Accounting For Depreciation

Accounting For Depreciation Learning Objectives: Define and explain the term “depreciation”. Why does depreciation calculated and charged? What are the different methods for providing depreciation? Definition and Explanation of Depreciation: The value of assets gradually reduces on account of use. Such reduction in value

## Fixed Installment Method or Straight Line Method or Original Cost Method of Depreciation

Fixed Installment Method or Straight Line Method or Original Cost Method of Depreciation: Learning Objectives: Define, explain and give example of fixed installment or straight line or original cost method. What are the advantages and disadvantages of of using this method? Fixed installment method

## Basic Factors of Determination of Depreciation

Basic Factors of Determination of Depreciation: Learning Objectives: What are the basic factors of depreciation determination? For calculation depreciation the basic factors are: The original cost of the asset. The estimated working life of the asset or the number of years the asset is

## Causes of Depreciation

Causes of Depreciation: Learning Objectives: What are the causes of definition? The main causes of depreciation may be divided into two categories, namely: Internal Cause and External Causes Internal Causes: Depreciation which occurs for certain inherent normal causes, is known as internal depreciation. The
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