Calculation of depreciation

Posted by on Jun 10, 2012 in Uncategorized | 0 comments

Depreciation of asset depending on the remaining useful life when compared with modern equivalent assets.  Remaining life of an asset depends on physical factors or economic factors, or a combination of both.Physical age is the length of an asset can be used for any purpose, by ignoring the possibility to create a new return or do reconstruction.

Calculation of depreciation using the straight-line depreciation method is commonly used as a technique of calculation of depreciation on buildings, because this technique is relatively easy to apply. Depreciation with straight-line technique assumes a similar magnitude, which is allocated as depreciation per year over the estimated useful life.Lack of straight-line technique: use simple assumptions, where the decline in value every year uniform. Yet when compared with a replacement value of similar assets, the results are not necessarily the same. The assumption is taken only correct on two points over the duration of benefits, namely at the beginning and end. It is a coincidence, if a large depreciation with straight-line technique in accordance with the depreciation is actually happening at the time of valuation. Thus to know the large depreciation that could be done valuation of assets periodically

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