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This method results in a larger proportion of depreciation charged to the earlier years of the assets life and is applied to assets that are known to be more productive in their earlier years.
From the two methods of depreciation mentioned above, the most suitable method for depreciating the lathes would be the reducing balance method...
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Machinery like the lathes are more productive and efficient when first bought. However, they are prone to face technical obsolescence as they are constantly updated and improved to be even more productive and efficient. By using the reducing balance method, W.Wally would also benefit from having an accurate rate of depreciation being charged against the lathes per year...
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