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Effective life of the asset

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Querist : Anonymous

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Querist : Anonymous (Querist)
21 February 2013 SUPPOSE AN ASSET COSTING RS.115000 PURCHASED ON 2.4.2012. DEPRECIATION @15% WDV. HOW TO CALCULATE THE LIFE OF THE ASSET?
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Amit Ashok Chawla

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Amit Ashok Chawla (Expert)
22 February 2013 The life of the asset determines the depreciation rate and not the other way round. However, to answer your question, you would realize that the asset reduces every year by 15% of the previous year's value. Assuming a benchmark amount of let us say INR 5,000 below which the asset is written off completely, the asset's useful life is 20 years. If the benchmark amount is say INR 10,000 as defined by the company, the life is 16 years.
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