Why reducing balance method比straight line method 好?

Why reducing balance method比straight line method 好?


2 個解答

  • 1 十年前

    1) More Realistic:

    More realistic reflection of an asset's actual resale value, Because the assets can be sell for a higher value in earlier year, and less in the later year.

    2) Expectation of output:

    The expected benefit from the use of the asset, the productivities in the earlier year is higher than the latter year.

    3) Tax

    The reducing balance method can help the company to lower the tax in earlier year, it is a heavy burden for the company to acqusit the asset as the same time pay tax.(The money used in purchasing the asset may probably cause out financial problem to the company.

    2007-01-18 17:51:42 補充:

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  • 1 十年前

    Point 3 incorrect: The reducing balance method cannot reduce tax; it is because depreciation will be added back in tax computation so it has no effect on tax liability