Lease accounting

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simran (Querist)

29 November 2012 if cost of machinery is 1500000 and estimated life 6 years& salvage value is 60000 and company eligible for straight line depreciation rate at 10% my question is that how we calculated depreciation if company eligible for straight line depreciation . i already calculated depreciation 1500000-60000/6=240000 but I want to know depreciation through straight line basis.question depend fully on depreciation. so reply me early.

Amol S Joglekar

Amol S Joglekar (Expert)

29 November 2012 (1500000 - 60000)= 1440000 is the amount to be depreciated over a period of estimated life of the asset (machinery in this case). Where has this 10% come from?

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simran

simran (Querist)

29 November 2012 its not correct because we deduct salvage value only when we calculated depreciation according to no. of life but here we want to calculated depreciation based on straight line rate and in which machine fully depreciated over 6 years.

Amol S Joglekar

Amol S Joglekar (Expert)

30 November 2012 240,000 shall be the depreciation to be provided per year, for 6 years.

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