Advertisements
Advertisements
प्रश्न
What is the annuity method?
Advertisements
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
APPEARS IN
संबंधित प्रश्न
Answer in One Sentence only:
What is a ‘Scrap Value’ of an asset?
Answer in One Sentence only:
What is Fixed Instalment Method?
State whether the following statement is True or False with reasons:
Depreciation is charged on fixed assets.
State whether the following statement is True or False with reasons:
Wages paid for installation of Machinery are debited to Wages A/c.
Complete the following sentence:
______ is the value which an asset realises at the end of its useful life.
A depreciable asset may suffer obsolescence due to ______.
A machine costing ₹ 23,000 is estimated to have a life of 7 years and the scrap value is estimated at ₹ 2,000 at the end of its useful life. Find out the amount of depreciation p.a.
Mr. ‘X’ purchased Furniture on 1st October 2015 at ₹ 2,80,000 and spent ₹ 20,000 on its installation. He provides depreciation at 6% under the straight-line method on 31st March 2016. Calculate the amount of depreciation.
M/s Sitaram and Co Purchased a Machinery on 1st January 2016 for ₹ 2,00,000. The company provides depreciation @ 10% p.a. on Reducing Balance Method on 31st March every year. Calculate Written Down Value of Machinery as of 31st March 2017.
In the Written Down Value Method, depreciation is calculated on the:
