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There are broadly2 types of depreciation methods followed namely,1. Straight Line Method (SLM) and2. Written Down Value (WDV).
SLM method follows fixed % and amount of depreciation for a particular class of assets over its useful life.
WDV method follows fixed % of depreciation rates over the life of assets thereby giving higher ABSOLUTE AMOUNT of depreciation in the initial years over later part of the useful life.
Then there are variants of these2 styles of depreciation like bullet depreciation, moratorium depreciation.
Basically, the concept of depreciation is to ASCERTAIN the amount to be charged to the current year's profit amounts for the charge of use of assets so that at the end of useful life of an assets, the organisations is ready with the funds for buying the new assets.
