For depreciation, should I use straight-line or reducing balance?

Straight-line depreciation spreads an asset's cost evenly across its useful life, which suits assets that lose value at a roughly steady rate over time — buildings, office furniture. The reducing-balance method calculates depreciation as a percentage of the remaining book value each year, giving higher charges early on and lower ones later — better suited to assets that lose real value faster in their early years, like computers and technical equipment.

Whichever method is used, IAS 16 requires the asset's useful life and residual value to be reviewed at least once every financial year, not set once at purchase and forgotten. If it turns out the asset's actual useful life will run longer or shorter than originally expected, the depreciation charge needs adjusting prospectively from the current period onward. RASEEKH reviews the depreciation policy with the client annually, not just books it once and leaves it.