Question

What do you think is the best method used in the calculation of depreciation? Why is that?

Answer 1

There are different methods available for calculating the depreciation. The best method used for calculating depreciation is Straight Line depreciation method. This is used commonly. This method is easy to calculate as the amount of depreciation is calculated by simply dividing the difference of the original cost or fixed asset and the salvage value of the asset. The results have less errors and is a consistent method. This can be measured and depicted graphically. The formula for this straight line method is

Annual depreciation= (Cost of asset - salvage value)/ useful life of an asset.