mridul savio Pinto (articled trainee ) (1477 Points)
26 May 2011actuallt there is a question ....according to that the cost of the assest is 100000 ... and the expected scrap value is given as 2000 ... the useful life is 5 years .....and the depreciation is to be charged under straight line method ..
doubt the rate of depreciation is whether 19.6 % or 20 %??
2 ) the depreciation for the third year under straight line method is ?
19600 or 20000 ? in material rate is given as 20 % and depreciation 19600??
Sasanka Bhalaki
(Student)
(1935 Points)
Replied 26 May 2011
it is 19600..see..if it is rate..(100000-2000)*20%= 19600 for five years..
if in normal case..(100000-2000)/5yrs=19600 for five years..
in straight line method..depreciation will be equal full period of life..
Sasanka Bhalaki
(Student)
(1935 Points)
Replied 26 May 2011
it is 19600..see..if it is rate..(100000-2000)*20%= 19600 for five years..
if in normal case..(100000-2000)/5yrs=19600 for five years..
in straight line method..depreciation will be equal full period of life..
Mahesh
(Student)
(386 Points)
Replied 27 May 2011
me too same but now am clear.....thanks all of you...
shakuntala chhangani
(FCA Course co-ordinator WIRC coaching centre)
(2525 Points)
Replied 31 May 2011
Hi Mridul, the answer to ur question is :
the amount of depreciation p.a = Historical cost - scrap value
estimated useful life
= 1,00,000 - 2,000
5
= Rs. 19,600 per annum
rate of depreciation = Depreciation per annum x 100
historical cost
= 19,600 x 100
1,00,000
= 19.6%
Regards, CA Shakuntala Chhangani
shakuntala chhangani
(FCA Course co-ordinator WIRC coaching centre)
(2525 Points)
Replied 31 May 2011
further keep in mind that rate of dep is always on original cost or wdv and never on depreciable amount. so it can never be (98,000 x 20%). it will be 1,00,000 x 19.6 % p.a which, after five years will leave a scrap value of 2,000.
Regards, CA Shakuntala Chhngani
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