This article throws light upon the top seven methods for charging depreciation on assets. The methods are: 1. Fixed Installment 2. Diminishing Balance Method 3. Annuity Method 4. Depreciation Fund Method 5. Insurance Policy Method 6. Revaluation Method 7. Depletion Method 8. Machine Hour Rate Method. Method # 1. Fixed Installment: This is the oldest and simplest method of charging [...]
Here we detail about the two heads for treatments of asset disposal account. (A) When Depreciation is Charged to the Asset Account: In this case depreciation is charged to asset account and in the balance sheet, the asset is shown at its written down value (i.e., less of depreciation). When an asset is sold, the written down value of the [...]
Here we detail about the two methods for recording depreciation in the books of accounts, i.e, (A) Charging Depreciation to Asset Account (B) Creating Provision for Depreciation Account or Accumulated Depreciation Account. (A) Charging Depreciation to Asset Account (When Asset is Shown at Net Depreciated Value): Under this method, depreciation is charged to respective assets account. It is credited in [...]