Example of annuity method of depreciation
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Annuity Method of Calculating Depreciation. ... The asset is credited every year with a fixed amount of depreciation. The amount of depreciation to be charged every year is such that in spite of asset being debited with interest every year, the asset is reduced to zero or its residual value.
Example: A firm purchased a 5 years' lease for $40,000 on first January. It decides to write off depreciation on the annuity method.
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Here is your Answer
Annuity Method of Calculating Depreciation. ... The asset is credited every year with a fixed amount of depreciation. The amount of depreciation to be charged every year is such that in spite of asset being debited with interest every year, the asset is reduced to zero or its residual value.
Example: A firm purchased a 5 years' lease for $40,000 on first January. It decides to write off depreciation on the annuity method.
☺ Hope this will help you.
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