Fixed Percentage on Original Cost. As the same implies, every year a suitable percentage
of the original cost is written off. Suppose, the cost Is Rs. 60,000 and 80% is to be written off;
every year 8% of Rs. 60,000, i.e., 4,800 will be written off. Depreciation Account will be
debited, Machinery Account will be credited.
The amount to be written off each year may also be determined as :
Cost – Estimated scrap Value/Estimated life
One should remember while writing off depreciation (under all method) that if the fixed asset concerned has been used only for part of a year, depreciation should be provided only for that part of the year. If the asset has to be discarded before the expiry of its life, the amount realised should be credited to the account of the asset and the remaining amount should be written off as a loss.
The book value of the machine is found by deducting the total accumulated depreciation
from the cost.
of the original cost is written off. Suppose, the cost Is Rs. 60,000 and 80% is to be written off;
every year 8% of Rs. 60,000, i.e., 4,800 will be written off. Depreciation Account will be
debited, Machinery Account will be credited.
The amount to be written off each year may also be determined as :
Cost – Estimated scrap Value/Estimated life
One should remember while writing off depreciation (under all method) that if the fixed asset concerned has been used only for part of a year, depreciation should be provided only for that part of the year. If the asset has to be discarded before the expiry of its life, the amount realised should be credited to the account of the asset and the remaining amount should be written off as a loss.
The book value of the machine is found by deducting the total accumulated depreciation
from the cost.
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