ABSTRACT
The figure opposite shows the ‘straight line’ of the falling net book value year by year, and the ‘straight line’ annual depreciation charge. Using the straight line basis, annual depreciation can always be expressed as a constant percentage of original cost. (If there is any residual value, this is not Vn X cost, where n is the estimated useful life.)
(b) Usage (machine hour) method Under this method, depreciation for a period is based on usage (for instance, the number of hours a machine is used).
