1. DEPRECIATION POLICY
There are many more methods that can adopted in charging depreciation on non-current
assets,some of which are used in particular industries,such as the hotel and catering
industry.
There is no information easily available to show how many organizations are using each
method.It is possible to devise one’s own special method.If it brings about an equitable
charge for depreciation for the organization,then the method will be suitable.
The purpose of depreciation is to spread the total cost of a non-current asset over the
periods in which it is to be used.The method chosen should be that which allocates cost to
each period in accordance with the proportion of the overall economic benefit from using the
non-current assets that was expended during that period.
If , therefore,the main value is to be obtained from the asset in its earliest years,it may be
appropiate to use the reducing balance method,which charges more in the early years. If on
the other hand,the benefits are to be gained evenly over the years, then, the straight line
method would be more appropiate