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متابعة

What should be the basis to choose the type of Depreciation calculation method?

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تم إضافة السؤال من قبل Mir Afzal Ali , Senior Accountant , Archen Engineering Consultants Co
تاريخ النشر: 2015/11/19
Hany El Kady
من قبل Hany El Kady , Group Planning & Budgeting Supervisor , National Holding Company for Multi-Modal Transportation (Qalaa Holding Subsidiary)

Simply, you are trying to match benefit to cost in each accounting period over the life time of the asset, so you try to analyze if the asset will benefit the business equally of the years (straight line), or is it a technological tool that will be out dated soon, so it will be more beneficial during the early years (declining method).

 

Otherwise, if the lifetime of the asset is mainly based on its utilization and production rates, then you can report depreciation of its value relative to the production levels compared to the maximum performance of the life time

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