1.

Distinguish between Straight line and Diminishing Balance Method of charging Depreciation on the basis of: (a) Depreciation Charge (b) Amount of Depreciation (c) Suitability 

Answer»
Basis Straight Line MethodDiminishing Balance Method 
Depreciation Charge Depreciation is calculated on original cost of a fixed AssetDepreciation is calculated on Written Down Value or diminishing balance of a fixed Asset 
Amount of DepreciationThe amount of depreciation remains same for all years The amount of depreciation diminishes each year chronologically
Suitability This method is more suitable for assets which get depreciated on account of expiry of working life of an asset. This method is more suitable for assets which require more maintenance in later years of working life.


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