Method of Providing Depreciation

Method of Providing Depreciation :- there are mainly three methods of charging depreciation as per AS 10.

1. Straight Line Method:- In this method a fixed Amount is written off during the working life till asset become nil. This method is simple and accurate. This method is also known as fixed Installment method /Original cost method. Lease holds property generally depreciated by fixed installment method.

                                                   Cost of Assets-Scrap value

Straight Line Depreciation = ------------------------------------------

                                                                Useful life.

2. Reducing Balance Method/ diminishing value method/ written down method:-- Under this method, a fixed percentage of diminishing value of asset is written off each year. Annual charge of depreciation decreases from year to year.

3. UNIT OF PRODUCTION METHOD – In this method depreciation is charged on the basis of expected use or unit of production

Demo Classes of Accounts (CA/CMA/CS/B.Com/11-12th) by CA/CMA Santosh Kumar Sir


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