The method used to expense an asset should match the asset usage pattern. More expense should be recognized in periods when an asset is used more and less in periods when the asset is used less. There are 3 methods for recognizing depreciation expense as follows:
- Straight line method: produces the same amount of depreciation expense each accounting period
- Double declining balance: produces more depreciation expense in the early years and less in the later years
- Units of production: Produces a varying amount of depreciation.