what is meant by straight-line / reducing balance?

[chauhan79]

I am doing a book keeping course and i have asked this question to explain in 700 words what is meant by the straight-line and reducing balance methods of depreciation. Your answer should also make it clear when each method is appropriate..can any body help me please...

[OSAIDism]

Straight line method of depreciation and reducing balance method of depreciation both are commonly used methods of depreciation and permitted by IAS.

Straight-line depreciation results in a constant charge over the useful life if the assets residual value does not change. Which means that it is assumed in this method of depreciation that equal benefit is derived from use of that asset each year.


On the other hand the diminishing balance method results in a decreasing charge
Over the useful life, and it is assumed that the benefit derived from the use of asset is decreased over the period.

[Sh.Mohsin]

How it could be possible to write 700 words on this topic...???

[Qureshi Muhammad Zeeshan]

well dear just write the story on this topic by including Examples and state more clearly and just Ignore conciseness..hehe

[chauhan79]

Thank your everybody for the answer really appreciated for your time.....