This depreciation business appears to involve a lot of guesswork. To calculate the annual charge you guess the life of the asset, its scrap value and expected pattern of reduction in value. You tell us that there is a choice of methods available and that no method can be claimed to be correct in particular circumstances. You admit that the rate of depreciation charged for taxation purposes differs from the rate used in the accounting records. It seems to me that the company will run into difficulties with the taxation department.’ Discuss.