# How to compute straight-line, double-declining balance,and units of production depreciation methods

May 5th, 2015
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Understand how to compute straight-line, double-declining balance, and units of production depreciation methods and how a company choose the appropriate depreciation method. Also understand how they compare to one another over the course of an asset's life.

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Question : Understand how to compute straight line, double declining balance, and units of production depreciation and how a company chooses the appropriate depreciation method. Also understand how these depreciation methods compare to each other meaning how they compare to one another over the course of an assets life?Answer: Depreciation means the allocation of the cost of a plant asset to the periods in which services are received from the asset. For example, if a depreciable asset has a cost of \$5,200, a residual value of \$400, and an estimated useful life of four years. Straight-Line Depreciation Method: A method of depreciation which allocates the cost of an asset(minus residual value) equally to each year of its useful life. This method is cost appropriate when usage of an asset is fairly uniform from year to year. Cost of depreciable asse

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