Describe the methods of recording depreciation in the books of account. How is the balance of the provisions for depreciation account shown in the Balance Sheet?

Depreciation is a systematic allocation of the cost of a tangible fixed asset over its useful life. In financial accounting, several methods can be employed to record depreciation, each with its advantages and implications for financial reporting and tax purposes. The primary methods include straight-line depreciation, declining balance depreciation, units of production depreciation, and sum-of-the-years'-digits depreciation.

1. Straight-Line Method:  
This is the most straightforward and widely used method. Under this approach, an equal amount of depreciation expense is allocated each accounting period throughout the asset’s useful life. The formula for calculating straight-line depreciation is:  
\[ \text{Annual Depreciation Expense} = \frac{\text{Cost of Asset} - \text{Salvage Value}}{\text{Useful Life}} \]  
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