what is depreciation and famous methods of depreciation?

Question

Accepted Answer

Depreciation determines a fixed asset's value is reduced over its useful life due to wear & tear. It spreads the cost of an asset over its useful life. 
Types of Depreciation: 
1.	The straight-line method is the most basic way to record depreciation. It reports an equal depreciation expense each year throughout the entire useful life of the asset until the asset is depreciated down to its salvage value.
2.	Declining balance method: the rate of depreciation is fixed but depreciation is getting calculated on the remaining balance after deducting depreciation for previous years.
3.	Double declining balance method: Same as declining method but the interest rate is double.
4.	Unit of production method depreciates assets based on the total number of hours used or the total number of units to be produced by using the asset, over its useful life.
5.	The sum-of-the-years-digits method is one of the accelerated depreciation methods. A higher expense is incurred in the early years and a lower expense in the latter years of the asset’s useful life. The remaining life of an asset is divided by the sum of the years and then multiplied by the depreciating base to determine the depreciation expense.

what is depreciation and famous methods of depreciation?

Top Genpact Manager- RTR interview questions & answers

Top HR questions asked in Genpact Manager- RTR