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April 11, 2008

Is it acceptable for companies to use two methods of depreciation?

Yes, many companies use two or more methods of depreciation.

It is acceptable and common for companies to depreciate its plant assets by using the straight line method on its financial statements, while using an accelerated method on its income tax return.

A company could also be depreciating its equipment over ten years for its financial statements, while using seven years for its income tax return.

Even the depreciation for financial statements could consist of some assets being depreciated using the units of production or units of activity method, while other assets are depreciated using the straight line method.

Learn more about Depreciation.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

7 Responses to “Is it acceptable for companies to use two methods of depreciation?”

  1. Taymor on April 14th, 2008 2:38 am

    Right on the money. No pun intended…

  2. Junaid on May 2nd, 2008 7:39 am

    Sir,

    I have got very informative information from these Q&A

    Thanks,

    Junaid Khan.

  3. ibrahim elsayed on May 2nd, 2008 4:11 pm

    thank you nery much for your good helpfull

  4. MIR AYYAS ALI on June 23rd, 2008 9:31 am

    how many methods of depreciation exists(straight line, wdv,annuity,sinking fund, hrs method, etc) i need to know more about it

  5. MIR AYYAS ALI on June 23rd, 2008 9:33 am

    can a company change the method of dep in course of time of asset?

  6. Liz Rice on April 28th, 2009 8:40 am

    Hello, I can’t understand how to add your blog in my rss reader.plz tell me thank you.

  7. ACoach on April 28th, 2009 9:00 pm

    You can click the orange RSS button at the top right of the page where it says “Free updates with your feed reader”.

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