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On 1st April 2017 an asset was purchased for Rs 40000 .its estimate life is 5 years after which scarp value will be Rs 2500. prepare assets account first three years after providing depreciation on every 31st March by straight line method?
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On 1st April 2017 an asset was purchased for Rs 40000 .its estimate li...
Assets Account for First Three Years


Initial Cost and Estimated Life


  • Asset Purchased on 1st April 2017 for Rs 40000

  • Estimated life of the asset is 5 years

  • Scrap value after 5 years is Rs 2500



Straight Line Method

Straight Line Method is one of the most popular depreciation methods used by businesses. It is a simple method that involves dividing the cost of the asset by its useful life and then depreciating by the same amount every year.


Depreciation Calculation


  • Depreciation per year = (Cost - Scrap Value) / Useful Life

  • Depreciation per year = (40000 - 2500) / 5 = Rs 7500



Assets Account for First Three Years


  • 31st March 2018 - Depreciation for the year = Rs 7500

  • Asset Value as on 31st March 2018 = Rs 32500 (40000 - 7500)

  • 31st March 2019 - Depreciation for the year = Rs 7500

  • Asset Value as on 31st March 2019 = Rs 25000 (32500 - 7500)

  • 31st March 2020 - Depreciation for the year = Rs 7500

  • Asset Value as on 31st March 2020 = Rs 17500 (25000 - 7500)

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On 1st April 2017 an asset was purchased for Rs 40000 .its estimate li...
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On 1st April 2017 an asset was purchased for Rs 40000 .its estimate life is 5 years after which scarp value will be Rs 2500. prepare assets account first three years after providing depreciation on every 31st March by straight line method?
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