Methods of Calculating Depreciation Amount
The depreciation to be provided for an accounting year depends up on depreciable amount and the method of allocation. For this, two methods are mandated by law and enforced by professional accounting practice in India.
These methods are:
- Straight line method and
- Written down value method.
The selection of an appropriate method depends upon the following:
- Type of the asset;
- Nature of the use of such asset;
- Circumstances prevailing in the business;