Question
Download Solution PDFFind the building’s depreciation cost using straight-line method, when the building’s cost, scrap value and life are Rs. 3,00,000/-, Rs. 1,00,000/- and 10 years respectively.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFConcept The
By Straight line method
Depreciation is given by
\({D_m} = \frac{{{C_i} - {C_s}}}{n}\)
Where Dm is depreciation
Ci is Initial cost of an asset
Cs is Salvage or scrap value (Estimated at the end of utility period)
Book value (Bm) at the end of 'm ' years life is given by
\({B_m} = {C_i} - m × {D_m}\)
Calculation
Given,
Ci = 3,00,000 /-, Cs = 1,00,000 /-
n = 10 years
Depreciation is
\({D_m} = \frac{{300000- 100000}}{10} = 20000\)
∴ The value of depreciation is 20000/year
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