Methods of depreciation Essay

After completing the spreadsheet for Fan partnership A, I suggest that the company habit units of output for their order of depreciation. The reason wherefore I choose units-of-production, which is also cognise as activity method, is due to the position that is incorporates the straight-line method musical composition figuring in the life expectancy in monetary take to be of numbers/time of operation for the plus (WileyPlus). For example why depreciate a piece of equipment the same amount apiece course if in that year it has been barley used compared to a year when it has been in constant use. Depreciating exploitation units-of -production contribute in my opinion more accurately determine the life and value of the gunpoint in question. The reason why I do non suggest using straight-line method is because it measures age and doesnt learn the amount of usage.I did read in the text of WileyPlus that most companies use the straight-line method because of its simplici ty and is a constant one dollar bill figure they scum bag determine each year. Looking at double declining residuum method it has the additions depreciating at an speed rate compared to the other methods. This method does not compute the deduction of salvage value in it. Even-though this method will view a greater result in depreciation expense each year the total depreciation over the life story of the summation will not be greater than the total depreciation.Furthermore, another method of accelerated depreciation is score-of-the-long time- digits. This method takes the assets evaluate life and adds unneurotic the digits for each year. So if the asset was expected to last for five years, the sum of the years digits would be obtained by adding 5 + 4 + 3 + 2 + 1 to bewitch a total of 15. Each digit is then divided by this sum to determine the percentage by which the asset should be depreciated each year. Even-though this method takes into love the life of the asset it is to accelerated and can depreciate faster than needed while causing the asset to appear invaluable when in all actuality it is in goodness operating/functioning order.Works Citied rogueWileyPlus, Kieso, Internediate, Accouting, 14th edition, 2000-2014, John Wiley & Sons, Inc.