hi,
cost of an asset 10lakhs
residual value 2.5
estimated life 10 years
wt is wdv rate? as per AS-6
pls explain with all steps
2 Replies
Deepak Gupta
(CA Student)
(15922 Points)
Replied 16 November 2013
| Originally posted by : gayathri | ||
 |
hi, cost of an asset 10lakhs residual value 2.5 estimated life 10 years wt is wdv rate? as per AS-6 pls explain with all steps |
 |
Rate of Depreciation = 1-(Scrap Value/Cost)^1/life [^ = to the power of]
= 1-(250000/1000000)^1/10
= 1-(0.25)^1/10
.
Now, how to calculate (0.25)^1/10 in calculator
.
1) Type 0.25
.
2) Then press square root sign, 12 times
.
3) Then press – sign and 1, i.e. -1
.
4) Now press divide sign and life i.e /10
.
5) Now press + sign and 1, i.e +1
.
6) Now without pressing =, press X and then = sign
(repeat this X= process 12 times, X and = together constitute one time)
.
In this calculation process, only life part if variable, rest of the steps are fixed.
.
You will get (0.25)^1/10 as 0.871 (taken upto three decimal places)
= 1-(0.25)^1/10
= 1- 0.871 = 0.129*100 = 12.9 or 13% approx.
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