Accounting › Section J · Long-term assets › Topic J.2
Depreciation methods
Once a machine's cost is capitalised, it has to reach the income statement over the years the machine earns revenue. Straight-line, units-of-production and double-declining-balance are three ways to spread that cost, and the choice changes reported profit year by year.
In this topic
- Spreading cost, not tracking value
- The vocabulary
- Straight-line
- Units-of-production
- Worked example: one machine, two methods
- Double-declining-balance
- Worked example: hitting the floor
- Switching to straight-line
- Partial years
- Choosing and comparing methods
- Common mistakes to avoid
- Key takeaways
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