Annual Depreciation under Reducing Balance and Straight Line Methods

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Under this method, higher depreciation charge is recognized in earlier years of asset’s life but charges lower depreciation in the later years compared to the straight line method. In other words, the reducing balance method is like the straight-line method on steroids. The depreciation methods only differ with respect to timing of reporting depreciation. However, the total depreciation under both methods over the life of the asset is almost same.