there are six methods of depreciation.
but most widely using methods are SLM and WDV methods.
SLM - straight line method
Depreciation equal to( Total cost of a Assest-scrap)/life of the Asset in years.
Example. Total cost of the Asset = 10000
scrap = 1000 ,life of the asset is 10 years
the depreciation 9000/10 = 900
WDV - Written down value method
first year Depreciation equal to Total cost of the asset*Depreciation rate as applicable as per schedule Xiv of companies act 1956.
second year depreciation = WDV of the asset * *Depreciation rate as applicable as per schedule Xiv of companies act 1956.
WDV= last year closing balance of asset after providing depreciation.
after second year also follow second year depreciation formula until WDV of the asset become ZERO.
From India , Madras
but most widely using methods are SLM and WDV methods.
SLM - straight line method
Depreciation equal to( Total cost of a Assest-scrap)/life of the Asset in years.
Example. Total cost of the Asset = 10000
scrap = 1000 ,life of the asset is 10 years
the depreciation 9000/10 = 900
WDV - Written down value method
first year Depreciation equal to Total cost of the asset*Depreciation rate as applicable as per schedule Xiv of companies act 1956.
second year depreciation = WDV of the asset * *Depreciation rate as applicable as per schedule Xiv of companies act 1956.
WDV= last year closing balance of asset after providing depreciation.
after second year also follow second year depreciation formula until WDV of the asset become ZERO.
From India , Madras
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#Subject List: fixed assets companies act companies act 1956 income tax act City-India-Madras Country-India
Accounts.pdf
