ACC 230 Week 2 CheckPoint Differentiating Depreciation Methods

ACC 230 Week 2 CheckPoint Differentiating Depreciation Methods

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Discuss and differentiate straight line method of depreciation and accelerated method. Depreciable assets lose value with time because of wear and tear, aging and obsolescence. This loss in value of tangible assets with time is called depreciation. Straight line depreciation method is most commonly used. In this method, charges are spread evenly over the useful life of the asset. Depreciation charged every year in this method is constant. This allows for more income smoothing where income has gradual change over useful life of the asset without dips and highs. Accelerated method of depreciation assumes that an asset is used heavily during the early years of its useful life and loses most of its value during first few years of use.In this method, in early years there will be heavy depreciation. Depreciation decreases with time and by the end of useful life of the asset, depreciation becomes zero. So, this method lacks constant expense over time. However,since depreciation is deducted from income for tax reporting,accelerated method
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