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Depreciation Accounting 
 
CPT Section A: Fundamentals of Accounting. 
Chapter-5 : Depreciation Accounting 
Part 4: Methods of Depreciation/Sale of Fixed Asset 
 
CA. Poonam Patni 
 
Page 2


Depreciation Accounting 
 
CPT Section A: Fundamentals of Accounting. 
Chapter-5 : Depreciation Accounting 
Part 4: Methods of Depreciation/Sale of Fixed Asset 
 
CA. Poonam Patni 
 
The Topics Already covered in Part 2 
Sum of Digits Method 
Differences between SLM & WDV Method 
Reducing Balance Method (WDV) 
Straight Line Method (SLM) 
Page 3


Depreciation Accounting 
 
CPT Section A: Fundamentals of Accounting. 
Chapter-5 : Depreciation Accounting 
Part 4: Methods of Depreciation/Sale of Fixed Asset 
 
CA. Poonam Patni 
 
The Topics Already covered in Part 2 
Sum of Digits Method 
Differences between SLM & WDV Method 
Reducing Balance Method (WDV) 
Straight Line Method (SLM) 
The Topics Already covered in Part 3 
Production Unit Method 
Machine Hour Rate Method 
Sinking Fund Method 
Annuity Method 
Page 4


Depreciation Accounting 
 
CPT Section A: Fundamentals of Accounting. 
Chapter-5 : Depreciation Accounting 
Part 4: Methods of Depreciation/Sale of Fixed Asset 
 
CA. Poonam Patni 
 
The Topics Already covered in Part 2 
Sum of Digits Method 
Differences between SLM & WDV Method 
Reducing Balance Method (WDV) 
Straight Line Method (SLM) 
The Topics Already covered in Part 3 
Production Unit Method 
Machine Hour Rate Method 
Sinking Fund Method 
Annuity Method 
Learning Objectives 
INSURANCE 
POLICY 
METHOD 
Pros.      
Cons. 
Example 
DEPLETION 
METHOD 
Pros.         
Cons. 
Example 
DOUBLE 
DECLINING 
METHOD 
Example 
SALE  OF 
DEPRECIABLE 
ASSET 
Example 
Page 5


Depreciation Accounting 
 
CPT Section A: Fundamentals of Accounting. 
Chapter-5 : Depreciation Accounting 
Part 4: Methods of Depreciation/Sale of Fixed Asset 
 
CA. Poonam Patni 
 
The Topics Already covered in Part 2 
Sum of Digits Method 
Differences between SLM & WDV Method 
Reducing Balance Method (WDV) 
Straight Line Method (SLM) 
The Topics Already covered in Part 3 
Production Unit Method 
Machine Hour Rate Method 
Sinking Fund Method 
Annuity Method 
Learning Objectives 
INSURANCE 
POLICY 
METHOD 
Pros.      
Cons. 
Example 
DEPLETION 
METHOD 
Pros.         
Cons. 
Example 
DOUBLE 
DECLINING 
METHOD 
Example 
SALE  OF 
DEPRECIABLE 
ASSET 
Example 
Insurance Policy Method 
Read More
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FAQs on PPT : Depreciation Accounting - 4 - Accountancy Class 11 - Commerce

1. What is depreciation accounting?
Ans. Depreciation accounting is a method used in financial reporting to allocate the cost of an asset over its useful life. It helps to reflect the wear and tear, obsolescence, or decrease in value of an asset over time.
2. How is depreciation expense calculated?
Ans. Depreciation expense is calculated by dividing the asset's cost by its estimated useful life. The most common method used is the straight-line method, where the depreciation expense is evenly spread out over the asset's useful life.
3. What are the different methods of depreciation accounting?
Ans. There are several methods of depreciation accounting, including the straight-line method, declining balance method, units of production method, and sum-of-the-years'-digits method. Each method has its own advantages and is suitable for different types of assets.
4. Why is depreciation important in accounting?
Ans. Depreciation is important in accounting as it helps to accurately reflect the decrease in value of an asset over time. It allows businesses to properly allocate the cost of an asset over its useful life, matching the expense with the revenue generated by the asset.
5. How does depreciation impact financial statements?
Ans. Depreciation impacts financial statements by reducing the reported value of assets on the balance sheet and increasing expenses on the income statement. It also affects the calculation of net income and can impact metrics such as return on assets and profitability ratios.
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