Do you need customer support or technical assistance? Click here to submit a support ticket...
  • Page:
  • 1

TOPIC: Order of Depreciation Methods.

Order of Depreciation Methods. 2 years 10 months ago #4297

  • Ashwin Kini
  • Ashwin Kini's Avatar Topic Author
  • Offline
  • Fresh Boarder
  • Fresh Boarder
  • Posts: 16
  • Thank you received: 0
Do we have a defined order of Depreciation Methods that provides higher write-offs early in order of it's acceleration?

Order of Depreciation Methods. 2 years 10 months ago #4298

  • Cornelius Fichtner
  • Cornelius Fichtner's Avatar
  • Offline
  • Administrator
  • Administrator
  • PrepCast Instructor
  • Posts: 1066
  • Karma: 33
  • Thank you received: 172
Hi Ashwin,

I believe that your question is outside of what you need to know for the PMP Exam. However, here is my understanding:

First of all, the depreciation method you use has less to do with "which one is fastest" but more with "which one is permissible". Depreciation affects your company's taxable income and therefore it is your local tax authority that will tell you which of the methods you are allowed to use in which circumstances.

Second, if you depreciate an asset over five years then the value of the asset will be 0 at the end of the five years no matter which method you use.

And third, it is my understanding that the double declining balance method depreciates more in the early years than the other two. The sum of years method is second and straight line is third. (But again... you don't need this for the PMP exam).
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC
  • Page:
  • 1
Moderators: Yolanda MabutasAhmed AminScott GillardMichael DeCiccoRahul KakkarFernando Jr Sinlao LimMary Kathrine PaduaChris PreziottiLazard Toe, ITBMC, MPM, CIPM, PMP, ITILChristian WinterGail FreedmanKevin NasonMichael Sumaquial, PMPSteven Mudrinich, PMPMark Wuenscher, PMP

OSP INTERNATIONAL LLC
OSP INTERNATIONAL LLC
Training for Project Management Professional (PMP)®, PMI Agile Certified Practitioner (PMI-ACP)®, and Certified Associate in Project Management (CAPM)®

×
Join the upcoming PMP Exam Coaching Class with Coach Dan Ryan. 5 Weeks of Live Coaching for just $49. Learn More...