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What is the difference between straight line depriciation
method and written down value method?
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Answer Posted / suresh
SLM - under SLM an equal amount of charge(Dep)is reduced
from the original value of the asset every year based on a
certain %.
WDV - under WDV the charge(Dep)is calculated and reduced
every year on the reduced amount from the previous year
again based on certain %
Expl:
Original Cost of Car 100,000
Rate of Dep 10% every year
Depreciation calculation:
SLM
1 year 10,000(10% of 100,000)
2 year 10,000(10% of 100,000)
3 year 10,000(10% of 100,000) and so on....
WDV
1 year 10,000(10% of 100,000)
2 year 9,000(10% of 100,000-10,000=90,000)
3 year 8,100(10% of 100,000-10,000-9,000=81,000)
and so on....
| Is This Answer Correct ? | 42 Yes | 5 No |
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