ABSTRACT
Depreciation allocates original cost (less ultimate resale value) against profit, in aiming to match expense against related revenue. It is not a process of ‘valuation’ year by year.
Straight line depreciation is the most common in the UK. It writes off a constant percentage of cost each year; while the declining balance method writes off a constant (higher) percentage of the (declining) net book value at the start of each year.
