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Question
“In case of a long term asset, repair and maintenance expenses are expected to rise in later years than in earlier year”. Which method is suitable for charging depreciation if the management does not want to increase burden on profits and loss account on account of depreciation and repair
Solution
The written down value method is comparatively more useful than the straight line method of depreciation as in the cases when the assets have the long-term utility and the repair and maintenance cost is expected to rise in the later years of the life of the asset.
Thus this method of depreciation does not create the burden on the profit or the loss accounts.
This happens because in this method of depreciation the rate of the depreciation declines year after year.
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