Compare and contrast the three (3) methods for depreciating plant assets. Recommend the method that maximizes profits for both a shorter period of time and a longer period of time.
Respond to peer posting: The methods for depreciating plant assets are Straight Line, Declining Balance and Units of Activity. Using Straight Line, firms expense an equal amount of depreciation off the equipment each year until the asset becomes unusable.Declining Balance is a constant rate computed to be applied to the declining book value on a yearly basis.Unit of Activity is expressed as total units that are expected to produce or the assets activity throughout its life. The assets cost is then allocated to the periods of the assets usage, units produced and activity. Straight Line would be the best method of depreciation as it depreciates assets on a consistent measured basis over the life of the asset.
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