What is the difference between straight line depriciation
method and written down value method?
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Answer / girish
Straight line method means charging depreciation on the
original cost of goods and written down method means
charging depreciation on balance amount every year.
| Is This Answer Correct ? | 103 Yes | 9 No |
Answer / 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 |
Answer / uma
Normally the amount written off every year is the same in
Straight line depreciation method and it differs in Written
down method as the depreciated amount is calculated on the
written down value.
| Is This Answer Correct ? | 32 Yes | 12 No |
Answer / sanjib
In S L M depreciation is evenly charged over fixed
assets.But in W D V method depreciation is charged unevenly
over the fixed assets.
| Is This Answer Correct ? | 24 Yes | 6 No |
Answer / heena
In straight line method the amount to be depreciated remains constant where as In written down method the amount to be depreciated decreases by each passing year.
| Is This Answer Correct ? | 25 Yes | 8 No |
Answer / mahathi
straight line method we follow fixed percent of depreciation to calculate the value of the asset. written down value method is we reducing the valued of the asset every year.
| Is This Answer Correct ? | 6 Yes | 1 No |
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2. You are required to prepare a Profit & Loss Account for the year ending 31st December, 2007 and the Balance Sheet on that date. The Trial Balance of XYZ Ltd. for the year ended 31st December 2007 is as follows:- Trial Balance of XYZ Ltd. as on 31st Dec. 2007 Debit Balances Rs. Credit Balances Rs. Materials used 3,50,000 Sales(including 2% Sales tax) 9,18,000 Cost of Labour 1,50,000 Sale of Scrap 100 Stock, finished and work in process on 31st December, 2006 50,000 Rent received 2,000 Wages : Factory Staff 15,000 Discounts 2,750 Directors Remuneration 50,000 Recovered against fire claim re : Stock 5,000 Salaries : Clerical Staff 75,000 Capital : Equity 25,000 Insurances : Workmen’s Compensation 1,500 Preference- 9% 8,000 General, fire etc. 2,000 Creditors 1,56,000 Directors’ Life Insurance 1,500 Provision for Taxation 1,05,000 Maintenance : Buildings 1,000 Profit & Loss Account 13,750 Plant and Machinery 12,500 Rent and Rates of premises and hire of plant 20,000 Heat, Light and Power 15,000 Experimental and Laboratory Expenses 10,000 Canteen Expenses 5,000 Staff Welfare expenses 2,500 Motor Expenses 12,500 Professional Charges 2,800 Postage and Telephone 3,500 Books, Printing and Stationery 11,000 Sundry expenses 10,000 Carriage and Packing on Sales 3,300 Discounts 5,000 Debtors 1,78,000 Freehold Property 50,000 Plant and Machinery 12,500 Fixtures and Fittings – Offices 3,500 Office machinery and Equipment 3,000 Motor Car and Van 6,500 Stock of materials on 31st Dec. 2007 1,20,000 Bank 38,000 Sales Tax Paid 15,000 12,35,600 12,35,600 Depreciation is to be provided at the following rates: Plant and Machinery 10% Fixture and Fittings 05% Office Machinery, etc. 10% Motor Vans and Cars 25% The stock of finished goods and work in progress as on 31st December, 2007 was Rs. 35,000. Provide for preference dividend and ordinary dividend at 10%. The total taxation liability is estimated at Rs.1,50,000 of which Rs. 75,000 relates to the current year. Debtors include Rs. 10,000 deposited as security against government contracts. The Works Manager is paid partly by salary and partly by a commission; he is entitled to a commission of 5% on the amount by which the surplus in the factory cost exceeds 20% of the sales for the period. Charge the commission if any in the Profit and Loss Account.
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