I have noticed that my company accounts is based on reducing basis depreciation. I am struggling to understand why this would be the case. When questioned my accountant I was told “I use the reducing balance basis because that is the method used by HMRC when first year allowances are not claimed”. Is this true?
With reducing basis depreciation I have assets which are still being depreciated but will soon be sold and thus I will have to take a hit on the income statement. I also find it difficult to forecast future years easily.
Is there any good reason to be using reducing basis over straight line?