"since the calculation of depreciation is based on
estimate,notfacts,why bother to make the calculation?
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Answer / harish
Every asset dimnishes its value after its use. so there are
some fixed percentages set up alreay for some type of
asests for depreciation. eg: plant and mach should be dep @
25 % and Land and Buildings should be de @ 10 % etc. Even
though it is an estimate, there should be some
accountability for the depreceiable value so as to arrive
at the accurate value of the asset.
| Is This Answer Correct ? | 16 Yes | 11 No |
Answer / h.r. sreepada bhagi
Basis of depreciation is fact, i.e. cost of the assets, life
of the assets is estimate (i.e. No. of yrs.an asset can be
used). For financial accounting & tax accounting rates are
specified in the relevant statutory Acts of each country.
For Cost & Management accounting purpose, usually the cost
of the asset as reduced by the estimated reduced value is
divided by estimated output over the lifetime of the asset
or the estimated life of the asset, depending up on the
nature or class of the asset. While charging depreciation to
Profit & Loss A/c it's reasonableness and not accuracy which
is taken in to account.
| Is This Answer Correct ? | 5 Yes | 4 No |
Answer / maged
We have two methods to make the depreciation:
1- Direct Method:
Dep.=(Cost - Resedual Value) / useful life.
2- Double Declining Method:
Dep.= Book Value * Depreciation percentage
as Book Value =[Cost-Accumulated Dep.]
And note, we have estimations depend on basics.
like; How much this asset will be used and for how long
time and its quality and is it cabable to be used in this
process?
| Is This Answer Correct ? | 2 Yes | 6 No |
Answer / sameer nirmal
It's very much important to ascertain right value of
assets, depreciation is the value of assets which is used
in making profit. It is one of the kind of loss for the
company or firm.We need not to decide percentage of
depreciation over assets it's already given in Accounting
Standard 6.
| Is This Answer Correct ? | 2 Yes | 11 No |
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