Sunday 29 May 2011

2. Reducing / Diminishing Balance Method OR Written Down Value Method

Features :
(1) Depreciation is calculated at a fixed percentage on the original cost in the first year. But
in subsequent years it is calculated at the same percentage on the written down values
gradually reducing during the expected working life of the asset.
(2) The rate of allocation is constant (usually a fixed percentage) but the amount allocated
for every year gradually decreases.

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