What Are The Commonly Used Depreciation Methods In Accounting?

1. years average method

The average age method, also known as the straight line method, refers to a kind of apportionment of the depreciable amount of fixed assets to the life expectancy of fixed assets.

Annual depreciation = (original price - estimated net residual value). Estimated useful life = original price * (1- estimated net residual value / original price). Estimated useful life = original price * annual depreciation rate.

Monthly depreciation = annual depreciation /12

2. workload method

The amount of depreciation per year will vary with the workload of assets.

General assets in different years

Depreciation of unit work load = original value of fixed assets * (1- residual rate) / estimated total workload

Monthly depreciation = the actual amount of fixed assets in the month and the amount of depreciation per unit of work.

Characteristics: not every accounting period is equal in depreciation.

3. double declining balance method

The double declining balance method is two times the depreciation rate of the straight line method, which is used as the fixed depreciation rate multiplied by the initial net value of the fixed assets period which is decreasing year by year.

Annual depreciation = net book value of fixed assets (excluding net residual value) * 2/ estimated service life

Note: in the last two years, the balance of the net book value of the fixed assets after deducting the estimated net salvage value is depreciated according to the straight-line method.

4. year summation method

The sum method of annual numbers, also known as the depreciation years method or series deduction method, is one of the accelerated depreciation methods for fixed assets.

It is a method to calculate the depreciation of fixed assets by multiplying the net value of the original value of the fixed assets minus the residual value by multiplying a decreasing year by year score.

The annual decreasing fraction of the molecule represents the number of years that the fixed assets can be used; the denominator represents the total number of years used in the year, assuming that the useful life is n years, and the denominator is 1+2+3+.

+n=n (n+1) 2, the relevant formula is as follows:

Annual depreciation = (original price - estimated net residual value) * annual depreciation rate

Annual depreciation rate = the sum of useful years / estimated life expectancy * 100%