DEPRECIATION
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 March 2011
dear sir
what is the diff between WDV AND SLM METHOD
what is the diff between WDV AND SLM METHOD
19 March 2011
SLE Method we will consider no. of year.
dep = Value of asset- scarp value / no. of years of use ful life
depreciation value is same for all years.
IN WDV Method we will % as dep rate. every year we will caluclate % dep on written down value
dep = Value of asset- scarp value / no. of years of use ful life
depreciation value is same for all years.
IN WDV Method we will % as dep rate. every year we will caluclate % dep on written down value
Message likes :
1 times
20 March 2011
SLM = straight line method
Since the amount of depreciation is the same from one year to the next, there is no need to be concerned with recalculating the rate of depreciation each tax period. Calculating straight-line depreciation begins by considering the total purchase price of the asset and determining the number of years that the asset will be considered useful.
While the yearly rate may vary, all methods will eventually reduce the asset's value to zero. Straight line depreciation is comparatively the simplest of the all the methods. To calculate it, the asset's salvage value is first deducted from its purchase cost.
WDVM = written down value method
The written down value method is an accelerated method of depreciating assets. This method assumes that assets are more efficient and productive during their initial usage periods. Hence, there arises the need to provide higher depreciation on the assets during their initial times. The amount of depreciation is very high initially and then keeps decreasing as time progresses. By the end of its useful life, the asset's value is completely written off.
For example, if the cost of the asset is Rs. 1,000 the rate of depreciation is 10 % on Rs. 1,000 i.e., Rs. 100, in the second year, it will be 10 % on Rs 900 i.e., Rs. 90 is the third year, it will be 10 % on Rs 810 (900-90) i.e., Rs. 81 and so on.
Since the amount of depreciation is the same from one year to the next, there is no need to be concerned with recalculating the rate of depreciation each tax period. Calculating straight-line depreciation begins by considering the total purchase price of the asset and determining the number of years that the asset will be considered useful.
While the yearly rate may vary, all methods will eventually reduce the asset's value to zero. Straight line depreciation is comparatively the simplest of the all the methods. To calculate it, the asset's salvage value is first deducted from its purchase cost.
WDVM = written down value method
The written down value method is an accelerated method of depreciating assets. This method assumes that assets are more efficient and productive during their initial usage periods. Hence, there arises the need to provide higher depreciation on the assets during their initial times. The amount of depreciation is very high initially and then keeps decreasing as time progresses. By the end of its useful life, the asset's value is completely written off.
For example, if the cost of the asset is Rs. 1,000 the rate of depreciation is 10 % on Rs. 1,000 i.e., Rs. 100, in the second year, it will be 10 % on Rs 900 i.e., Rs. 90 is the third year, it will be 10 % on Rs 810 (900-90) i.e., Rs. 81 and so on.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- GST ON EXPORT COMMISSION
- Should I report my US salary for January, February, March in Schedule FA?
- Sale of property furniture sale
- Confusion around Form 26QB fields
- Adjustment entry in the case of Individual and HUF on 31st March
- Stock difference tax applicable on composite rate or normal rate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
