Definition of Depreciation Methods
There are various methods of depreciating assets that are used in a business. It is acceptable and common for companies to use two or more of the methods of depreciation.
Examples of Using Two Methods of Depreciation
It is very common for a company to depreciate its plant assets by using straight-line depreciation on its financial statements, while using an accelerated method of depreciation on its income tax return.
A company could also be depreciating its equipment by using a useful life of 10 years for its financial statements, while using a useful life of 7 years for its income tax return.
Even the depreciation for a company’s financial statements could consist of some assets being depreciated using the units of production or units of activity method, while other assets are depreciated using the straight-line method.
