1.

Give three points of difference between Straight line and Diminishing Balance Method of charging Depreciation.

Answer»
MeaningA method of depreciation in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year.A method of depreciation in which a fixed rate of  depreciation is charged on the book value of the asset, over its useful life.
Calculation of depreciation On the original costOn the written down value of the asset.
Annual depreciation charge  Remains fixed during the useful life. Reduces every year
Value of assetCompletely written offNot completely written off
Amount of depreciationInitially lowerInitially higher
Impact of repairs and depreciation on P&L A/cIncreasing trendRemains constant


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