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Please Explain the following Depreciation Methods?
1.stright line method
2.reducing method
3.annuti Method
4.funds Method
5.insurance Method
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Straight line method: This method assume equal amount of
depn over an assets useful life. This translates to equal
depn expenses amount every period.
Reducing method: The reducing balance method of depreciation
provides a high annual depreciation charge in the early
years of an asset's life but the annual depreciation charge
reduces progressively as the asset ages.
To achieve this pattern of depreciation, a fixed annual
depreciation percentage is applied to the written-down value
of the asset. Thus, depreciation is calculated as a
percentage of the reducing balance.
Annuti method: A method of depreciation under which the
depreciation expense is an amount of an Annuity so that the
amount of the annuity at the end of the useful life would
equal the Acquisition Cost of the asset
fund method:the depreciation charge should include interest
on accumulated depreciation at the beginning of the period.
This method is rarely used in practice.
insurance method:
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