What is "depreciation" essentially, and should the accounting profession allow multiple methods for depreciating long-term assets?...

What is "depreciation" essentially, and should the accounting profession allow multiple methods for depreciating long-term assets? Why or why not?

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Depreciation - It is the systemmatic and rational allocation method used to achieve matching.It is associated with alocation of historical cost of fixed assets over its useful life so as to match cost associated with the long term asset with its economin benefit being earned, thus both are matched as per the respected period cost and benefit are aligned.

Yes there are different types of depreciation methods and all these methods are permissible as per the reporting framework issued by accounting professiona body.

The different methods can be used by the organisations depending on whether they want to allocate the assets cost on initial years, then they can opt for declining balance method, or if they want to allocate cost periodically then they can use straight line depreciation method and whenever an organistaion wants to depreciate the fixed assets on basis of actual level of usage it can go for depreciation based on usage of production activity level.

ekkarill92 answered 1 year ago

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