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A. Straight line
B. Reducing balance method
It's depends on the polices of the company however most commonly used is Straight line depreciation method.
Dears ,
In here we are commonly used method is Straight line method , because its offering more simplicity, we will write off the same amount each year and don’t have to keep recalculating. we can determine our profits for future years easily; at least as far as how much we will save because of depreciation. In other words, as our profits grow, our depreciation costs stay the same. This allows us to make financial forecasts for several years. and we will receive the benefits of depreciation evenly over the life of the asset.
Depreciation(Straight line) = (Cost - Residual value) / Useful life
Best Regards ,
SHAMEEM
B. Reducing balance method
I believe all companies follow accounting standard. As for Depreciation is calculated using either a straight-line, accelerated, or usage-based system. The intent behind depreciation is to spread its cost over the period when the asset is assumed to be contributing to the generation of revenue. In many cases, there is not a direct linkage between changes in revenue levels and the cost of a fixed asset; instead, we simply estimate the useful life of an asset and use that as the basis for depreciation.
Before engaging in a depreciation calculation, it is useful to understand the following terms:
1. Capitalization Limit - This is the expenditure amount above which purchases are designated as fixed assets, and below which they are charged to expense in the current period.
2. Salvage Value - This is the amount that the company expects to receive from the eventual disposal of the fixed asset.
3. Useful Life - This is the expected period over which a fixed asset will be used.
Note : All depends on company Policy and Procedure.
A. Straight Line method is followed mostly in Middle East Countries for Zakat Payments.
Further for assets some countries urge for Reducing and some for Straight Line.
A. STRAIGHT LINE DEPRECIATION METHOD is most famous in middle east countries as per E&Y Audit firm.
A: Method is most common in SMEs but
B: is most common in Groups and Big companies
No one is common in UAE both are same common in UAE depend on company policy
The famous Straight Line Method which is used by allmost countries of the world in accordance with IFRS standards.
The answer is Straight Line Method Of Depreciation , which is very commonly used .
Straight line method Declining balance method Sum-of-the-years'-digits method
Depend on Company overview and also depend on Account Managers Specialty.
