| Fixed Instalment | Diminishing value |
| 1. Amount of depreciation is same every year. | 1. The amount goes on reducing year. |
| 2. Depreciation is calculated on original cost | 2. Depreciation is calculated on reducing balance of asset. |
| 3. Value of asset can be written down to zero or scarp value | 3. Value of assets cannot be written down to zero |
| 4. This method is useful for assets of lesser value such as furniture, patents etc. | 4. This method is useful to the assets with more value and longer life such as buildings, machinery, etc. |
