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Question
Under ___________ method depreciation is calculated on original cost.
Under ___________ method depreciation is calculated on original cost.
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Solution
The correct option is A SLM
There are various methods of charging depreciation on assets. Most commonly used methods are straight line method and reducing balance method.
Under SLM method, depreciation is charged on the original value of the asset every year.
For example:
Original cost at year I Rs.10000Less: Depreciation @10% for year I Rs. 1000 ------------------Book value at the beginning of year II Rs.9000Less: Depreciation @10% for year II Rs.1000 -----------------Book value at the beginning of year III Rs.9000
Less: Depreciation @10% for year III Rs. 1000
There are various methods of charging depreciation on assets. Most commonly used methods are straight line method and reducing balance method.
Under SLM method, depreciation is charged on the original value of the asset every year.
For example:
Original cost at year I Rs.10000
Less: Depreciation @10% for year I Rs. 1000
------------------
Book value at the beginning of year II Rs.9000
Less: Depreciation @10% for year II Rs.1000
-----------------
Book value at the beginning of year III Rs.9000
Less: Depreciation @10% for year III Rs. 1000
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