there are many models of depreciation
we look at four different types today
a. Straight line
b. Unit of production
c. Sum of digits
d. Double declining balance
b,c,d are accelerated models. Unit of production is typically used by natural resource company. They are based on matching concept.
One thing should be taken note when looking at depreciation
By lowering depreciation, one can increase profit. So it is important to see if company change the useful life or salvage value over the period to lower depreciation. If there do this, they are doing a prospective adjustment which will affect the future account.
Also take note to see if a company change the model used throughout the depreciation period. If they do this they are doing a retropective adjustment
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A common citizen enjoying as daddy. How to balance up life in career, family and other ambitions are dancing in my mind. I'll share those thoughts i sometimes have, especially in investment, since i observe most friends at my age can't run away from this. Occasionally I'll write about other stuffs.
