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प्रश्न
What is the annuity method?
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उत्तर
- Under this method, not only the original cost of the asset but also the amount of interest on the investment is taken into account while computing depreciation.
- The idea of considering interest is that if the investment is made in any other asset instead of the relevant fixed asset, it would have earned a certain rate of interest.
- To calculate the amount of depreciation, the annuity factor is used. The annuity factor can be found out from the annuity table or by using a formula.
- Amount of depreciation is computed as follows:
Amount of depreciation = Annuity factor × Original cost of the asset
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संबंधित प्रश्न
Answer in One Sentence only:
Which account is credited when depreciation is charged?
Answer in One Sentence only:
What is Fixed Instalment Method?
Select the most appropriate answer from the alternatives given below and rewrite the sentence:
Depreciation is charged only on ______ assets.
State whether the following statement is True or False with reasons:
The Profit or Loss on sale of fixed asset is ascertained only after charging depreciation.
Do you agree or disagree with the following statement:
Under written down value method the Depreciation curve slopes parallel to 'X' axis.
Complete the following sentence:
______ is the value which an asset realises at the end of its useful life.
Depreciation is to be calculated from the date when ______.
State the limitations of straight-line method of depreciation.
Mahesh Traders Solapur purchased Furniture on 1st April 2014 for ₹ 20,000. In the same year on 1st, Oct. additional Furniture was purchased for ₹ 10,000.
On 1st Oct. 2015, the Furniture purchased on 1st April 2014 was sold for ₹ 15,000 and on the same day, a new Furniture was purchased for ₹ 20,000.
The firm charged depreciation at 10% p.a. on the Reducing Balance Method.
Prepare Furniture Account and Depreciation Account for the year ending 31st March 2015, 2016, and 2017.
The Double Declining Balance Method applies depreciation:
