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Similar to Unit 3-Depreciation-Depreciation is an accounting practice used to spread the cost of a tangible or physical asset over its useful life. Depreciation represents how much of the asset's value has been used up in any given time period.
Similar to Unit 3-Depreciation-Depreciation is an accounting practice used to spread the cost of a tangible or physical asset over its useful life. Depreciation represents how much of the asset's value has been used up in any given time period. (20)
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Unit 3-Depreciation-Depreciation is an accounting practice used to spread the cost of a tangible or physical asset over its useful life. Depreciation represents how much of the asset's value has been used up in any given time period.
- 1. DEPRECIATION
- 9. The written-down value method is used to calculate the depreciation of an asset. The written-down value method increases the process of tracking the depreciation expenses and helps companies and owners to account for the correct amount of depreciation in the early years. The WDV method is also known as the ‘reducing balance method’. This method consists of applying a predetermined percentage of the amount of the asset on the balance sheet at the beginning of the accounting period. It also involves applying the amount of depreciation reduced in the following years.
- 11. It is also known as depreciation fund method
- 12. Insurance policy method is just like sinking fund method of depreciation, but in this method, the money is used to pay premium for insurance company. Premium will be charged at the start of the year. Money at the end of maturity can be used to buy a new asset.
- 13. Revaluation method of depreciation is the easiest method of depreciation. In this method, the asset value is assessed at the staring of the year and at the end of the year and difference between them is considered as depreciation to be charged. Revaluation method of depreciation will be done on fixed assets. Revaluation can be done by external party (professional) or internally.
- 14. Machine hour rate is called as service hour method. In this method, active hours of machine are taken into account for calculation of depreciation. This method is commonly used in sectors like chemicals, steel and other heavy industries. In this method, machine hour rate is established and charged to production. Machine hour rate means the amount spent on machine to run for an hour.
- 54. Particulars Note NO. 2015 2016 % of Balance sheet total 2015 % of Balance sheet total 2016 I. Equity & Liabilities 1. Shareholder a. Share Capital 18,00,000 18,00,000 45% 40% b. Reserves & Surplus 4,00,000 5,40,000 10% 12% 2. Non Current Liabilities 14,00,000 14,40,000 35% 32% 3. Current Liabilities 4,00,000 7,20,000 10% 16% TOTAL 40,00,000 45,00,000 100% 100% II Assets 1. Non current Assets 2800000 3060000 70% 68% 2. Current Assets 12,00,000 14,40,000 30% 32% TOTAL 40,00,000 45,00,000 100% 100% Common Size Statement
- 68. Particulars Note No. 31-3-15 31-3-16 Absolute change % Change I. Equity & Liabilities 1. Share Capital 8,00,000 10,00,000 2,00,000 25% 2. Reserves & Surplus 3,00,000 4,00,000 1,00,000 33.3% II. Non – Current liabilities 1. Long term borrowings 3,00,000 2,00,000 (1,00,000) (33.3%) III. Current Liabilities 5,00,000 4,00,000 (1,00,000) (20%) TOTAL 19,00,000 20,00,000 100,000 5.2% 2. Assets 1. Non current assets a. Fixed Assets 12,00,000 15,00,000 3,00,000 25% 2. Current Assets 7,00,000 5,00,000 (2,00,000) (28.7%) TOTAL 19,00,000 20,00,000 100,000 5.2% Comparative Balance sheet Statement of Y Ltd as on 31 March 2015 & 2016