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8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs. 1000 was spend on its installation. The depreciation is written off on 10 %the original cost every year. The books arc closed on 31st December each year. Under straight line method?
Most Upvoted Answer
8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs....
Under SLM, the depreciable amount remains constant throughout the life of machine.
Depreciable amount = (14,000+1,000) × 10/100 = 1500
Depreciation for the year ended 31 Dec 2003:
= 1500 × 6/12 = Rs.750
Depreciable amount = (14,000+1,000) × 10/100 = 1500
Depreciation for the year ended 31 Dec 2003:
= 1500 × 6/12 = Rs.750
Community Answer
8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs....
Calculation of Depreciation under Straight Line Method
Given Information:
- Cost of the company: Rs. 14,000
- Installation cost: Rs. 1,000
- Depreciation rate: 10% per year
- Books closed on 31st December each year
Straight Line Method:
Under the straight line method, the same amount of depreciation is charged every year over the useful life of the asset.
Calculation of Annual Depreciation:
The annual depreciation can be calculated using the following formula:
Annual Depreciation = (Cost - Salvage Value) / Useful Life
In this case, the cost of the company is Rs. 14,000 and the installation cost is Rs. 1,000. Therefore, the total cost of the asset is Rs. 15,000.
Salvage value is the estimated value of the asset at the end of its useful life. Since no salvage value is given, it is assumed to be zero.
The useful life of the asset is not provided in the given information, so we will assume it to be 10 years.
Annual Depreciation = (15,000 - 0) / 10 = Rs. 1,500
Depreciation Schedule:
Year 1:
- Opening Book Value: Rs. 15,000
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 13,500
Year 2:
- Opening Book Value: Rs. 13,500
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 12,000
Year 3:
- Opening Book Value: Rs. 12,000
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 10,500
Year 4:
- Opening Book Value: Rs. 10,500
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 9,000
Year 5:
- Opening Book Value: Rs. 9,000
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 7,500
Year 6:
- Opening Book Value: Rs. 7,500
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 6,000
Year 7:
- Opening Book Value: Rs. 6,000
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 4,500
Year 8:
- Opening Book Value: Rs. 4,500
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 3,000
Year 9:
- Opening Book Value: Rs. 3,000
- Depreciation Expense: Rs. 1,500
- Closing Book Value: Rs. 1,500
Year 10:
- Opening Book Value:
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8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs. 1000 was spend on its installation. The depreciation is written off on 10 %the original cost every year. The books arc closed on 31st December each year. Under straight line method?
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8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs. 1000 was spend on its installation. The depreciation is written off on 10 %the original cost every year. The books arc closed on 31st December each year. Under straight line method? 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 8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs. 1000 was spend on its installation. The depreciation is written off on 10 %the original cost every year. The books arc closed on 31st December each year. Under straight line method? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 8 A company purchased on Ist July 2003 at a cost of Rs. 14,000 and Rs. 1000 was spend on its installation. The depreciation is written off on 10 %the original cost every year. The books arc closed on 31st December each year. Under straight line method?.
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