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Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ?
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Fixed assets costing Rs 60000 has an estimated life of 8 years. At the...
Fixed Asset Depreciation using Fixed Instalment Method
Calculation of Depreciation
- Cost of the asset: Rs 60000
- Estimated useful life: 8 years
- Salvage value: Rs 12000
- Depreciable cost = Cost of the asset - Salvage value = Rs 48000
- Annual depreciation = Depreciable cost / Estimated useful life = Rs 6000 per year
Explanation of Fixed Instalment Method
The fixed instalment method is a depreciation method where the same amount of depreciation is charged against profit each year. The annual depreciation expense is calculated by dividing the depreciable cost of the asset by its estimated useful life. This method is also known as the straight-line method of depreciation.
In the given example, the cost of the asset is Rs 60000, and its estimated useful life is 8 years. The salvage value at the end of its useful life is Rs 12000. Therefore, the depreciable cost of the asset is Rs 48000 (Rs 60000 - Rs 12000).
Using the fixed instalment method, the annual depreciation expense against profit will be Rs 6000 (Rs 48000 / 8). This is the same amount of depreciation that will be charged against profit each year for the next 8 years.
Conclusion
In conclusion, the fixed instalment method is a simple and widely used method of depreciation. It ensures that the same amount of depreciation is charged against profit each year, making it easier to calculate and budget for. In the given example, the annual depreciation expense against profit using the fixed instalment method is Rs 6000 per year.
Community Answer
Fixed assets costing Rs 60000 has an estimated life of 8 years. At the...
12000 is book value end of use full life is equal to scrap value
dep =60000-12000/8
=48000/8
=6000....
dep =60000-12000/8
=48000/8
=6000....
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Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ?
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Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ?.
Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Fixed assets costing Rs 60000 has an estimated life of 8 years. At the end of its useful life it can be sold for Rs 12000. Using the fixed instalment method the annual depreciation against profit will be ?.
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