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How to compute depreciation rate?

(Guest)

Hi!

suppose the original cost of an asset is 10 lacs and scrap value is 2.5 lacs. the life of the asset is 10 years. the company follows wdv method. how would u compute the rate of depreciation? if u illustrate the answer with the help of a formula, then please explain the logic behind it and how u derive the answer. any help would be appreciated.

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25 Replies

kishore (student) (61 Points)
Replied 05 January 2008

hi ankita dev check up in CA final accountancy institute study material

Sathish Karunakaran (ACA) (614 Points)
Replied 05 January 2008

Hi, Steps to find Depreciation rates under WDV method, with the given depreciation rate under SLM and life of the asset. (i) Take Depreciation Rate under SLM (ii) Multiply with life of asset (iii) Divide by 100 (iv) Deduct from 1 (v) Find the root of step (iv) to the power of step (ii). (Here the power is the given life of asset) (vi) Deduct the above found result from 1 (vii) Multiply the above with 100 (viii) The result is the Depreciation Rate under WDV Method. In ur case - Cost = 10 L - RV = 2.5 L - Life = 10 Y Steps = SLM Rate is (10-2.5)/10*100 = 7.5% 7.5*10 = 75 75/100 = .75 1-.75 = .25 root of .25 to the power of 10 (life) = .87055 1-.87055 = .12945 .12945*100 = 12.945% (WDV Rate) Every subsequent yr.'s depreciation will be (100-12.945)% of the preceeding year's depreciation. In this ex. 2nd yr. depn. is 112693 and 1st yr. depn. is 129450. (i.e) 112693/129450*100 = 87.055 which is nothing but (100-WDV rate). Reducing portion is WDV rate between intermediate depreciations.

(Guest)

Dear Sir

Please give me depreciation rate of verious item in details.

and say hwo to calcuate it ?

Nagesh Surwase

(Guest)

Dear Sir

Please give me depreciation rate of verious item in details.

and say hwo to calcuate it ?

Nagesh Surwase

(Guest)

Please give rate of depreciation for varies items in details and say how to calculate

(Guest)

thank you very much for that answer. where did u find this info.?

(Guest)

dear sir,

i need your help in to know the depreciation rate for ngo working under govt sector depreciation rate for furniture fixtures & audio visuals and tv and computer etc

ngo is working for seven to eight years old and now closed down now what will be the depreciation rate for above item

please help me in this regards.

(Guest)

To compute the rate of depreciation under WDV

saurabh (CA) (552 Points)
Replied 24 October 2008

Originally posted by :Sathish Karunakaran
"	Hi, Steps to find Depreciation rates under WDV method, with the given depreciation rate under SLM and life of the asset. (i) Take Depreciation Rate under SLM (ii) Multiply with life of asset (iii) Divide by 100 (iv) Deduct from 1 (v) Find the root of step (iv) to the power of step (ii). (Here the power is the given life of asset) (vi) Deduct the above found result from 1 (vii) Multiply the above with 100 (viii) The result is the Depreciation Rate under WDV Method. In ur case - Cost = 10 L - RV = 2.5 L - Life = 10 Y Steps = SLM Rate is (10-2.5)/10100 = 7.5% 7.510 = 75 75/100 = .75 1-.75 = .25 root of .25 to the power of 10 (life) = .87055 1-.87055 = .12945 .12945100 = 12.945% (WDV Rate) Every subsequent yr.'s depreciation will be (100-12.945)% of the preceeding year's depreciation. In this ex. 2nd yr. depn. is 112693 and 1st yr. depn. is 129450. (i.e) 112693/129450100 = 87.055 which is nothing but (100-WDV rate). Reducing portion is WDV rate between intermediate depreciations.	"