Original cost= 126000 ,Salvage value=Nil ,useful life=6 years, depreciation for the 4th year under sum of years digits method will be ??? Plz give explanation for the above problem
And is 18000
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(167224 Points)
Replied 04 June 2019
1. Sum of digits of 6 years will be 21. (1+2+.....6 = 21)
2. Multiplying Factor (N) for each year will be original cost - final cost divided by digital sum
i.e. N = (126000 - 0) / 21.
or N = 6000.
So, depreciation for each year will be as ...
First year ......... 6 * N = 36000.
Second year ..... 5 * N
Third year .... 4 * N
Forth year .... 3 * N = 18000.
Fifth Year ..... 2 * N
Sixth Year ..... 1 * N = 6000
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