Machine Hour Rate Method:
Under machine hour rate method
of depreciation, total number of working
hours of a machine during the whole of its effective
life is estimated, and then the cost of machine is
divided by this estimated total number of working
hours in order to arrive at the hourly rate which is
multiplied by the number of hours the machine has
been worked during the year to find out amount of
depreciation for the period.
Mileage Method of Depreciation:
This method is used only for those
assets whose useful life depends upon the fact that
how many kilometers they have been driven e.g.
buses, cars, trucks, and rolling stock etc. The
depreciation on such assets depends on as to how
many kilometers these assets have been driven.
For example, a car costing $12,000
was purchased and useful life was estimated to be
48,000 kms. Its rate of depreciation would be 25
cents per kilometer. If during first year it was
driven 10,000 kilometers, the amount of depreciation
would be 10,000 ×
$0.25 = 2,500.
Global Method of Depreciation:
Under this method of depreciation,
the value of all the assets irrespective of their
nature is added together and depreciation is charged
at an average rate on aggregated value. It is not a
scientific method of providing depreciation. So it
should be avoided.