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What is the difference between Straight Line Method and Written Down Value Method?


Today we will discuss about the difference between straight line method and written down method:

S. No.
Point of difference
Straight line method
Written down value method
1.
What is straight line method and written down value method?
In this method the equal amount of depreciation is charged on original value of assets.
In written down value method the depreciation rate is charged on diminishing value of assets
2.
Straight line method and written down value method is also known as?
This method is also known as fixed instalment method, Original Cost of method.
This method is also known as diminishing balance method, Reducing Instalment method.
3.
Which method is used to calculate the tax?
Straight line method is not used to calculate the tax.
Written down value method is used to calculate the tax.
4.
For which assets straight line method and written down value method is used?
Straight line method is used for assets which are highly useful in whole life of assets. Like trademark.
Written down value method is used for assets which are highly useful in starting life of assets. Like machinery.
5.
What happened with the value of assets?
In straight line method the value of asset become zero or equal to residual value at the end of the life of an asset.
In written down method the value of asset does not become zero or equal to residual value at the end of the life of an asset.
6.
What are the advantages of straight line method and written down value method?
·         This method is easy to use.
·         The amount of depreciation can easily find out with the help of balance sheet.
·         The value of asset become zero or equal to residual value.
·         This method is also easy and simple.
·         It equalize the burden of depreciation and repair amount on profit and loss a/c.
·         The percentage of depreciation is fixed.
7.
Which method is more popular?
This method is not so popular in comparison to written down method.
This method is so popular in comparison to straight line method.
8.
Which method shows higher value at the end year of an asset?
In straight line method the value of asset become zero or equal to residual value.
In written down value method the value of depreciation value is higher in comparison to straight line method.
9.
What are the disadvantages of straight line method and written down value method?
·         The amount of depreciation charged on asset is uniform in each year but after using the asset the value of asset is decreases in each year which is not shown by using this method.
·         The depreciation, renewal cost and repair value of an asset is increases year by year which act as a burden on profit and loss a/c.
·         There is no provision for replacement of an asset.
·         The value of asset will not become zero or equal to residual value of asset at the end of the life of an asset.
·         To calculate the depreciation rate under this method is not easy.









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