| Straight line Method | Diminishing balance Method |
| 1. A Fixed amount is deducted from the value of an asset. | 1. The amount of depreciation goes on reducing year after year. |
| 2. Depreciation is computed on the original cost of the asset. | 2. Depreciation is calculated on the written down value of the asset. |
| 3. The value of the asset is reduced to zero at the end of effective working life. | 3. The value of the asset will not become zero after its effective working life. |
| 4. The method is also known as Fixed Instalment method or original cost method. | 4. This method is also known as reducing balance method or written down value method. |
