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It's depend on nature of Industry in which you are, reducing balance method is being preferred when revenue earned ratio during Initial year is high, and low in latter period E.g IT Industry whereby new technology replace old technology and provide more better results. However Straight Line method is being used where, Revenue earned by utilization of assets is uniform , E.g Rental Income from leased property.
Actually Its Depend On Following
1-Nature Of The Business(Corporation,Partnership,Soil Profiteer )
2-Taxation Rate
3-Nature and History Of Asset
4-Decomposition and Capitalization Of Asset Process
The People Like Straight Line Because Its Easy To Compute.
I agree to Mr. Sanjay Kumar technically, but it will not always likely the case. Generally straight line is most commonly used method.
It depends on company policy
if u expect that revenue earning is high during initial years and will lower gradually, it would be most appropriate to use Reducing Balance Method
otherwise Straight Line Method would would be appropriate
It depends on situation of business whether that to use straight line depreciation or reduced line depreciation method.
depend on nature of fixed asset and the method of extending the asset during life period
The straight line depreciation method takes the purchase or acquisition ... The simplest and most commonly used method of depreciation is the straight line ... depreciation is called the double declining balance (DDB) method.
Depreciation Expense = (Total Acquisition Cost – Salvage Value) / Useful Life
Basically it depends what is the pattern of economic benefit that will flow from the asset being considered to the entity. If Constant pattern, then straight line method, if declining pattern, then RBM, or unit method if the asset has life in number of production units and so on.
It all depends on industry and nature of assets. Mostly straight line method is used.
It depends.
Straight line method is more suitable for fixed assets that generates a more constant benefits such as Furniture and Fittings. it is fairer and more realistic.
Reducing balance method is used for fixed assets which depreciate more in the early years and in later years due to the efficiency of the fixed asset is higher in the early year. Therefore, reducing balance method used for assets such as motor vehicle and computers.
