In this lecture we will go through three different methods of depreciation and we'll see how efficient actual have impact on taxable income for the five years. We are assuming the taxable income will remain same throughout the five years so we can clearly see which method has a clear impact on depreciation tax shield. First wiper is SLM method. And as you know same deficient actually in all yours because of deposition amount the same as asset cost of asset is 150 thousand salvage value is 5000. depreciation would be 29,000. Based on the SLM method, formal and efficient tax shield would be 10,001 50 which is nothing but 29,000 to 35%, which will be seen throughout the useful of the assets. There is an advantage of using SLM method for the purpose of deficient actual and for reducing your taxable income.

Section second method is DB method as you can see, efficient actually is Assess life and taxable income is low or due to deficient tax shield in first few years. As you can see in dB method, the fascia depreciation is very very heavily 74,100 due to that the tax shield is quite high which is 74,108 to 35% 25,009 35 and gradually reduces. So, your taxable income would be lower in earlier years of assets life and it will be higher in later part of the assets life. So this is useful value where you want to show a lesser income in all areas of your venture or your business and your don't bother with the higher taxable income report of the year because your business really worked in first four years and you're okay with having additional tax paid to government and you have additional sources and income where you can reinvest in your business.

UDP method conceptually same as levy method. The deposition impact is a little less compared to dB method, but the appreciation is higher and efficient actually is higher in earlier useful life of the assets. Now, let's see the comparison between the these three methods. The next slide in the summary is deputy deposition in first two years is with the DB method as you can see, and it reduces gradually taxable income is lowered to hide a patient actually, in first few years and higher taxable income in later years. So as I mentioned before, it depends on how you want to show your business and taxable income to the government authorities and how you want to reinvest your profits after the taxes into your business. So clearly the accelerated method of depreciation which is DB mother DB method really helps in showing lesser income and reinvesting your profits into the business.

Well as a matter there is no such advantage you will have a same amount of depreciation tax shield and taxable income will also remain same assuming that in this segment taxable income is same. So if you have any question regarding taxation and appreciation and efficient action, please let me know. I'll be happy to answer that. Thank you very much for watching.