Commerce Exam  >  Commerce Videos  >  Accountancy Class 11  >  Comparative Analysis of Straight line and Written down Value Method

Comparative Analysis of Straight line and Written down Value Method Video Lecture | Accountancy Class 11 - Commerce

82 videos|105 docs|42 tests

FAQs on Comparative Analysis of Straight line and Written down Value Method Video Lecture - Accountancy Class 11 - Commerce

1. What is the difference between the straight line method and the written down value method?
Ans. The straight line method and the written down value method are two different approaches used for depreciation accounting. The straight line method evenly spreads the cost of an asset over its useful life, while the written down value method allows for a higher depreciation expense in the earlier years and lower expenses in the later years.
2. Which method is commonly used for financial reporting purposes?
Ans. The straight line method is commonly used for financial reporting purposes as it provides a more consistent and predictable depreciation expense over the useful life of an asset. This allows for easier comparison of financial statements and better transparency for investors and stakeholders.
3. How do these methods impact the value of an asset over time?
Ans. The straight line method gradually reduces the value of an asset in a linear manner, while the written down value method results in a steeper decline in the asset's value in the initial years and a slower decline in the later years. Ultimately, both methods will result in the same total depreciation expense over the asset's useful life.
4. Which method is more suitable for assets that have a higher rate of obsolescence or technological advancements?
Ans. The written down value method is more suitable for assets that have a higher rate of obsolescence or technological advancements. This is because it allows for a higher depreciation expense in the earlier years, reflecting the faster decline in the asset's value due to technological advancements or obsolescence.
5. How do these methods affect the calculation of an asset's book value?
Ans. The straight line method gradually reduces an asset's book value over its useful life, while the written down value method results in a more accelerated reduction in the asset's book value. This means that the book value of an asset will be lower when using the written down value method compared to the straight line method, especially in the earlier years of the asset's life.
82 videos|105 docs|42 tests

Up next

Explore Courses for Commerce exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

Summary

,

Objective type Questions

,

study material

,

Comparative Analysis of Straight line and Written down Value Method Video Lecture | Accountancy Class 11 - Commerce

,

mock tests for examination

,

Previous Year Questions with Solutions

,

Comparative Analysis of Straight line and Written down Value Method Video Lecture | Accountancy Class 11 - Commerce

,

ppt

,

Extra Questions

,

Viva Questions

,

Semester Notes

,

shortcuts and tricks

,

Comparative Analysis of Straight line and Written down Value Method Video Lecture | Accountancy Class 11 - Commerce

,

MCQs

,

Sample Paper

,

Free

,

practice quizzes

,

Important questions

,

past year papers

,

pdf

,

video lectures

,

Exam

;