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If we can determine the capacity of the equipment in terms of units, then the best depreciation method is the unit-of-production method.
The method a company should use is the one that best matches revenue with expenses. The method of depreciation should not be selected on the basis of which method of depreciation will result in a desired net income amount, however.
If the revenues management expects to receive from the use of an asset will be constant over its useful life, straight-line depreciation should be used so that the costs will also be constant over the asset’s useful life.
In contrast, if revenues from the use of the asset will be higher at the beginning of the asset’s life, then an accelerated method of depreciation should be used. note that all depreciation methods is accelerated except straight line method
Appropriate method of depreciation for fixed assets in production line would be reducing balance method charges depreciation at a higher rate in the earlier years of an asset. The amount of depreciation reduces as the life of the asset progresses.
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