actuallt 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??
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..
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..
depreciation will be (original cost- scrap value)/ estimated life of asset under straight line method..
thus it is (100000-2000)/5yrs = 19600
19600 is the correct answer....
me too same but now am clear.....thanks all of you...
THANX A LOT FRIENDS
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
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
RMA And Associates LLP
New Delhi
CA Inter
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