Question

Straight line method and written down value method of providing depreciation

Answer 1

Straight line method is based on original cost at which asset is purchased
asset can be depreciated using fixed rate p.a on cost it can also be based on life of the asset in that case the formula of dep shoulfd be
In case % is given= Original cost *%given
in case %not given=
(originalcost-scrap value)/useful life

written down value is simply based on the wdv % as per wdv is given and such % shall be applied on original cost - depreciation i.e. wdv
it is also known as reducing balance method of depreciation

eg
slm
cost 1lac useful life 10 years scrap 5k
so dep p.a. is 100k-5k=95k/10=9.5k p.a
same amount will be duducted every year as depreciation

wdv
cost scrap are same as above % of dep 10%
so dep in y1=100k*10%=10k
y2=(100k-10k)*10%=9k
and so on

always remeber that slm % age will be applicable on depreciable value i.e. cost-scrap
and wdv% will be applicable on in y1 on cost
than on cost-dep in y2 than wdv - dep in y3