Write down the Difference between Straight Line and Written Down Value Method.
1 Answer
| S.N | Straight Line Method | Written Down Value Method |
| 1. | Depreciation is calculated on the original cost of fixed assets. | Depreciation is calculated on the book value (i.e. original cost less depreciation) of fixed assets. |
| 2. | Amount of depreciation remains constant for all years | The amount of depreciation keeps on decreasing year after year. |
| 3. | At the end of the useful life of an asset, the balance in the asset account will reduce to zero | At the end of the useful life of an asset, the balance in the asset account will not reduce to zero |
| 4. | It is not accepted by Income Tax Law | It is accepted by Income Tax Law |
| 5. | Rate of depreciation is easy to calculate | Rate of depreciation is difficult to calculate |
| 6. | It is suitable for assets which get completely depreciated on the account of expiry of its useful life | It is suitable for assets which require more and more repairs in the later stage of its useful life |
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