Question
Distinguish between “Straight Line Method' and 'Written Down Value Method' of providing depreciation.
✓
Answer
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Basis of Distinction
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Straight Line or Original Cost Method
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Witten Down Value Method
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1.
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Amount of depreciation.
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Equal depraeciation charged every year.
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Depreciation goes on decreasing year after year.
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2.
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Basis of calculation of depreciation.
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Depreciation is charged on the original cost of the asset.
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Depreciation is changed on the reducing balance of the asset.
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3.
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zero level.
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The book value of the asset can be reduced to zero.
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The book value of the asset can never be reduced to zero.
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4.
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Combined effect of depreciation and repairs on P & L A/c.
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Combined burden on account of depreciation and repairs will be lighter in earlier years and heavier during the later years.
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Combined burden on account of depreciation and repairs will be almost equal over different years.
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₹
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|
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|
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