8/20/2019 Depreciation nethods

1/26

DepreciationAccounting

Group8

MP15002 : Abhimanyu SinghMP15021 : Kush Kumar

MP15030: Raghav Amani

MP1503! : Saurabh Sinha

8/20/2019 Depreciation nethods

2/26

8/20/2019 Depreciation nethods

3/26

,bective

• -o ca#cu#ate proper pro*ts&

• -o sho( the asset at its reasonab#e va#ue

• -o maintain the origina# monetary investment  o$ theasset intact&

• Provision o$ %epreciation resu#ts in some inci%enta#

a%vantages a#so&

• -o provi%e $or rep#acement o$ an asset&

• Depreciation is permitte% to be %e%ucte% $rom pro*ts$or ta) purposes&

8/20/2019 Depreciation nethods

4/26

.actors in /omputing Depreciation )pense

-Initial cost of the Asset

-Expected useful life

-Estimated value at the end of

its useful life

8/20/2019 Depreciation nethods

5/26

Depreciation Metho%s: Straight ine

• Provi%es $or the same amount o$ %epreciation e)pense $oreach year o$ the assets use$u# #i$e

8/20/2019 Depreciation nethods

6/26

Depreciation Metho%s:"ritten Do(n 4a#ueDec#ining 6a#ance

• 7n%er this metho% %epreciation is charge% at a *)e% rate

on the re%ucing ba#ance every year&

 

8/20/2019 Depreciation nethods

7/26

Depreciation Metho%s: Sum o$ Digits

•

 -his metho% is use% (here the amounto$ %epreciation goes on %ecreasing inthe coming years

 n (n+1) /2 ; where n=useful economic life (in years)

 

8/20/2019 Depreciation nethods

8/26

Depreciation Metho%s: 7nits o$Pro%uction

•

An asset8s use$u# #i$e is e)presse% in thetota# units that are e)pecte% to bepro%uce% or the asset8s tota# activity %uringits #i$e& -he asset8s cost is then a##ocate% to

the accounting perio%s base% on theasset8s usage' units pro%uce%' activity' etc&

 

8/20/2019 Depreciation nethods

9/26

Prob#ems

8/20/2019 Depreciation nethods

10/26

8/20/2019 Depreciation nethods

11/26

WRITTEN DOWN A!"E#DE$!INING-%A!AN$E

8/20/2019 Depreciation nethods

12/26

WRITTEN DOWN A!"E#DE$!INING-%A!AN$E

8/20/2019 Depreciation nethods

13/26

8/20/2019 Depreciation nethods

14/26

8/20/2019 Depreciation nethods

15/26

&trai'ht !ine (ethod

8/20/2019 Depreciation nethods

16/26

&trai'ht !ine (ethod

8/20/2019 Depreciation nethods

17/26

8/20/2019 Depreciation nethods

18/26

&um of Di'its (ethod#&um of The )ears’ Di'its (ethod

8/20/2019 Depreciation nethods

19/26

&um of Di'its (ethod#&um of The )ears’ Di'its (ethod

8/20/2019 Depreciation nethods

20/26

8/20/2019 Depreciation nethods

21/26

8/20/2019 Depreciation nethods

22/26

"NIT& O* +ROD"$TION

8/20/2019 Depreciation nethods

23/26

8/20/2019 Depreciation nethods

24/26

8/20/2019 Depreciation nethods

25/26

8/20/2019 Depreciation nethods

26/26