Question

Which depreciation method is the best method for a company to use? Why?

Which depreciation method is the best method for a company to use? Why?

Homework Answers

Answer #1

Straight-Line method is probably the best method for a company to use as it is easy to calculate and the depreciation expense is unifrom throughout the life of the asset and the transition of depreciation from financials to tax is simple.

The above conculsion is drawn with regards to a general company. However in real life the nature of the company is required to be considered like for an industrial company which producing by applying large factory and machinery and producing huge outputs will finf Units of Production method as the best method for depreciation as the same is dependent upon the production made in a particular year. If production is more then the company will be able to claim greater deduction for depreciation and vice versa.

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