Complete the following chart. In all cases assume that deprecation method used is Reducing Instalment Method and financial year ends on 31 Dec. Date of Purchase 1 Jan 1 Jan 1 July 1 March A B с D E F G H I J Cost Rs. 10,000 50,000 50,000 48,000 ? ? ? ? 60,000 80,000 Dep. Rate % 20 30 20 25 20 30 20 20 ? 1 Jan 1 Jan 1 Jan 1 July 1Sept. 1 April Dep. For First Year ? ? ? ? 40,000 18,000 15,000 ? 6,000 9,000 Dep. For Second Yr ? ? ? ? ? ? ? 4,000 ? ? Dep. For Third Year ? 2 ? ? ? 2 2 ? ? 2
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Subject/Course: Financial Accounting.
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