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..
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
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