![ Each year depreciation is so charged that the
future worth of all depreciation and salvage
value becomes equal to purchase price of the
asset.
d = (P-S) [ i / (1+i)N-1]
Dn = (P-S) [(1+i)n-1 / (1+i)N-1]
Low depreciation in early year](https://image.slidesharecdn.com/depreciation-180802044740/85/Depreciation-Done-by-Priyanga-KR-Assistant-Professor-Department-of-ECE-11-320.jpg)
Depreciation Done by Priyanga KR, Assistant Professor, Department of ECE
- 2. Way of availing the tax benefits for a tangible and intangible property, which losses the value over time Tangible - Car, Furniture (Seen orTouchable items) Intangible –Copyright, Licence (Touched or seen)
- 3. Out of Date Wear and tear Rusting and corrosion Improper repair High Maintenance Example: Machine value – Rs. 10lakhs. Sold after 5 years the price is less (Reason 1 n 2)
- 4. (BV)n = Book value at the end of n-th year dn = Depreciation charged in the n-th year P = Purchase Price of the asset N = Service value of the asset at the end of its life S = ScrapValue of the asset at the end of its life DN =Total depreciation charged till n-th year
- 5. Physical Functional Accident
- 6. Straight Line Method (SLM) Declining Balance Method (DBM) Double Declining Balance Method (DDBM) Sum of year Digits Method(SYD) Sinking Fund Method (SFM)
- 7. Value of asset decreases throughout the life of the asset. Total depreciation charged upto n – years P = Purchase Price S = ScrapValue
- 8. Asset loses its value faster in early life period Every year the book value of the asset decreases by a fixed percentage Disadvantage: Never depreciates to zero
- 9. It takes double the rate of depreciation and applying declining balance method
- 10. Value of asset decreases with a decreasing rate as it becomes older Features: Rapid depreciation in early years Asset depreciates to the salvage value at the end of life
- 11. Each year depreciation is so charged that the future worth of all depreciation and salvage value becomes equal to purchase price of the asset. d = (P-S) [ i / (1+i)N-1] Dn = (P-S) [(1+i)n-1 / (1+i)N-1] Low depreciation in early year