2. Explain the impact of calculating depreciation using the straight-line method versus an accelerated method on...

2. Explain the impact of calculating depreciation using the straight-line method versus an accelerated method on the amounts shown on a balance sheet.

Expert Solution

Calculation of depreciation through straight line method means that there would be uniformity in deduction of depreciation, throughout the life of the product and the same level of the depreciation would be charged on the product throughout its life.

Accelerated depreciation means higher rate of depreciation will be charged than straight line method of depreciation.it is depreciation method in which asset loses book value at a faster rate than it had lost using traditional method of straight line.

In earlier years, the asset will face a greater deduction in its overall book value and it is often used as a Tax reduction strategy. Accelerated depreciation can be used through double declining balance method and Sum of the years digit method.

The value of the Asset which will be left on the balance sheet would be more in straight line rate of depreciation method than accelerated rate of depreciation method.

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