Accouting Project

NameProfessorSubjectDateCompanies have a choice among the many systems available with which to deal the embody of fixed additions they have acquired . One of type of these systems is the diminish charge methods consisting of sum-of-the- old age -digits and declining-balance method (author 525 Under these methods , the company allocates a high portion of the make up of the summation in its earlier forms than in later ones . Because of the higher greet allocation in the earlier category these methods atomic number 18 also called the deepen method (526Sum-of-the- geezerhood -digitsThe name of this method is very descriptive of the formula employ to compute derogation woo . As one of the accele appraised methods to allocate woo , sum-of-the-years -digits allocates a higher depreciation cost in the early animateness of the asset , with the depreciation cost decreasing every year (527 . The first part of work out the depreciation cost under this method is to determine the depreciable cost of the asset , which is computed by infering the salvage value from the acquisition cost . The depreciable cost is multiplied by the rate of the depreciation for the year to arrive at the depreciation cost for the yearTo compute for the rate of depreciation for the year , the years of the estimated life of the asset are added . This serves as the denominator To illustrate : an asset with a useful life of three year will use a denominator of sise computed as (3 2 1 . The numerator is the estimated life of the asset at the beginning of the year . To illustrate : the rate of depreciation to be used on the asset above on its sulphur year of use is 2 /6 or 1 /3 . This method of computing depreciation is characterized by a rate of depreciation that changes every year .

At the complete of the useful life of the asset , the remaining balance of the asset will be its salvage value (527Computing for the sum of the years for an asset with a very high estimated life suffer be time-consuming . Mathematicians came out with a formula to speed up up the process . The formula is expressed as : n (n 1 ) all over 2 , with n as the estimated life of the asset (527Declining-balance MethodThe declining-balance method , on the other dig , uses a constant rate in computing the depreciation cost for the year . The rate is usually a eightfold of the straight-line method (527 ) To illustrate : an asset with an estimated useful life of louvre years is depreciated at the rate of 20 under the straight-line method and at the rate of 40 under the declining-balance method . The place used by the companies vary from industry to industry and from asset to asset (527Unlike the sum-of-the-years -digits , the declining balance method do not deduct the salvage value of the asset when computing for the depreciation cost . Instead , the book value of the asset is multiplied by the rate of depreciation to arrive at the allocated cost for the year and the process is...If you want to get a full essay, ensnare it on our website: Orderessay

If you want to get a full essay, wisit our page: write my essay .