What is written down Value method?
Submitted by: AdministratorDiminishing Balance Method or Written Down Value Method
Under this method, depreciation is charged at a fixed rate every year but on
reducing balance i.e., on balance reduced each year during the economic life of
the asset by the amount of depreciation till the asset is reduced to its scrap
value.
For example, if the cost of the asset is Rs. 1,000 the rate of depreciation
is 10 % on Rs. 1,000 i.e., Rs. 100, in the second year, it will be 10 % on Rs
900 i.e., Rs. 90 is the third year, it will be 10 % on Rs 810 (900-90) i.e., Rs.
81 and so on.
Submitted by: Administrator
Under this method, depreciation is charged at a fixed rate every year but on
reducing balance i.e., on balance reduced each year during the economic life of
the asset by the amount of depreciation till the asset is reduced to its scrap
value.
For example, if the cost of the asset is Rs. 1,000 the rate of depreciation
is 10 % on Rs. 1,000 i.e., Rs. 100, in the second year, it will be 10 % on Rs
900 i.e., Rs. 90 is the third year, it will be 10 % on Rs 810 (900-90) i.e., Rs.
81 and so on.
Submitted by: Administrator
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