Introduction:-Fixed assets such as plant and machinery etc. They are used for the purpose of producing goods or providing useful services in the course of production. The value of these fixed assets decreases with the passage of time and with its use, i.e. with wear and tear. This decrease in the value of an asset is called depreciation. Depreciation has been defined as "the decrease in the usefulness or value of an asset, due to normal wear and tear, exhaustion of the subject material, the passage of time, accidents, obsolescence or similar causes". In other words, when an asset owned by a company cannot be used in the future with the same efficiency and effectiveness with which it was used previously, the loss caused to the company will be depreciation. Depreciation caused byIt is called the fixed installment method because the depreciation amount remains fixed or the same from year to year. It is also called the "Straight Line Method" or "Constant Rate Method". The formula to calculate the depreciation amount is as follows: Depreciation = Cost - Estimated Residual Value Life Case 1: The cost of an asset is Rs. 11,000 and its residual value after its estimated life of 10 years is expected to be Rs. 1,000, then the annual depreciation amount will be under- Depreciation = 11,000 – 1,000 = Rs. 1,000 10 Declining Balance Method: -The decreasing balance method is calculated based on a fixed percentage of the depreciated value of the asset. The method implicitly assumes that the benefits accruing to the company from the use of the asset continue to decrease as the asset ages. As the value of the asset continues to decline from year to year, the amount of depreciation charged to different accounting years decreases as time passes. The formula to calculate the depreciation rate is as follows: Depreciation rate = [█(1-n√( (Residual value)/(Cost of the asset))@)]× 100Where n = Number of years of the asset