in this post, we take a look at 2 depreciation methods learnt in O and N level POA. They are namely straight line method and reducing balance method.
Which depreciation method is more suitable to depreciate the non current assets then? This depends on the pattern of usage of the assets. For example, fixtures and fittings such as tables and chairs provide constant benefits throughout their useful lives. In this case, straight line method is more suitable as equal amount of depreciation is charged every year.
On the other hand, machinery and motor vehicles provide higher benefits in the earlier years, hence reducing balancing method is more appropriate where higher depreciation is charged.
