Depreciation
business happens first
Example
Example When it is sold or is not longer
When it was bought for the useable
business
Fa ct o r s that a f fect the calc ulat ion of
Depreciation
Cost of asset
Estimated useful life of asset
Residual or scrap value of the asset
Method of calculating depreciation
Different methods:
Straightline method
Accelerated depreciation
Written down value method
Reducing balance method
Production based
method per unit and per hour
STRAIGHTLINE METHOD
It is a very popular method because its simplicity and consistency. A fixed
amount of original cost is charged as a depreciation every year.
Annual depreciation =cost of the assets residual value
Estimated economic life
12000
10000
8000
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