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what is depreciation? what are depreciation methods?
please explain those method? can any one reply urgently?
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Answer / m.a.sajid khan
depreication means redusing the value of asset to now the
future vaule of asset.dereciation will calculate only fixed
assets. depreication can calculate on different methods
some are given below.
1.stright line method
2.reducing method
3.annuti Method
4.funds Method
5.insurance Method
| Is This Answer Correct ? | 4 Yes | 2 No |
Answer / vinitha.t
Depreciating/reducing the value of the fixed assets to know
the current value of the assets. All assets are depreciated
except land&building because its value goes on increasing.
Types of depreciation
written down value method-It is depreciated by taking book
value of the assets with a percentage of a depreciation.
straight line method-It is depreciated by taking the
purchase value of the assets.
annuity method
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / dhanesh chandramagalam
DEPRECIATION MEANS REDUCING THE VALUE OF AN ASSETS DUE TO
CONTINUOUS USAGE, PASAGE OF TIME, OBSOLASIONS, WEAR & TAR
ETC,
METHODS
AS PER AS6 MENTIONED ONLY 2 METHOD BUT THEORETICALLY 7
METHODS 1 STRAIGHT LINE METHOD,2 WRITTN DOWN VALUE METHOD,3
SINKING FUND METHOD,4 ANNUTY MENTHOD,5. MACHINE HOUR RAE
METHOD,6, PRODUCTION HOUR RATE METHOD,& DEPLETION METHOD
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / m.a.sajid khan
depreciation means reducing the value of Fixed asset to now the future or expected value of asset.Depreciation will calculate only fixed assets only.Depreciation can be calculate with different methods.
Methods are given below.
1.stright line method/fixed installment method
2.reducing Balance method/Diminishing Balance Method
3.annuti Method
4.funds Method
5.insurance Method.
Depreciation is vast topic and its rules.According to GAAP and
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Tell me what is public accounting?
Case Study: Deepak Hand tools Private Limited DHPL is a small sized firm manufacturing hand tools. It manufacturing plan is situated in Haryana. The company’s sales in the year ending on 31st March 2007 were Rs.1000 million (Rs.100 crore) on an asset base of Rs.650 million. The net profit of the company was Rs.76 million. The management of the company wants to improve profitability further. The required rate of return of the company is 14 percent. The company is currently considering an investment proposal. One is to expand its manufacturing capacity. The estimated cost of the new equipment is Rs.250 million. It is expected to have an economic life of 10 years. The accountant forecasts that net cash inflows would be Rs.45 million per annum for the first three years, Rs.68 million per annum from year four to year eight and for the remaining two years Rs.30million per annum. The plant can be sold for Rs.55 million at the end of its economic life. The company would need to raise debt to the extent of Rs.200 million. The company has the following options of borrowing Rs.200 million: a. The company can borrow funds from a nationalized bank at the interest rate of 14 percent for 10 years. It will be required to pay equal annual installment of interest and repayment of principal. b. A financial institution has offered to lend money to DHPL at 13.5 per annum but it needs to pay equated quarterly installment of interest and repayment of principal. Questions: 1. Should the company expand its capacity? Show the computation of NPV 2. What is the annual installment of bank loan? 3. Calculate the quarterly installments of the Financial Institution loan 4. Should the company borrow from the bank or from the financial institution?
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