Which of the following is/are advantage of fixed instalment method of charging depreciation?

This method is acceptable to income tax authorities.

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The value of the asset can be completely written off, i.e the value can be reduced to zero.

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The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.

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All of the above.

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Solution

The correct option is C The value of the asset can be completely written off, i.e the value can be reduced to zero.
The annual depreciation charge in SLM remains fixed during the life of the asset. In straight line method, the book value of the asset is completely written off i.e. the asset value is reduced to zero or its salvage value. Conversely, the asset's book value is not completely written off in written down value method.

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Q. Assertion :Under diminishing balance method of depreciation, the charge for depreciation keeps on diminishing year after year in all subsequent years. Reason: Under diminishing balance method, the rate per cent at which depreciation is written off goes on diminishing year after year in all subsequent years.

___is a method of depreciation, in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year, where as in ___ method of depreciation, a fixed rate of depreciation is charged on the book value of the asset over its useful life.

On January 1, 2011, an asset was acquired for Rs30,000. Its useful life was expected to be 10 years and the salvage value is expected to be Rs0. After four years of use, the company realized the asset would be useful for only three more years. (In other words, the total useful life of the asset will be seven years instead of the original 10 years.) The company uses the straight-line method of depreciation. The Depreciation Expense in each of the years 2015, 2016, and 2017 will be Rs___

The original cost of the asset is Rs.2,50,000. The freight and installation charges amounted to Rs.25,000. The useful life of the assets 10 years and net residual value is estimated to be Rs. 50,000. Calculate the amount of depreciation to be charged every year under straight-line method for the year ended 31st December 2016, in each of the following conditions.
(i) When the asset has been purchased on 1st January 2016.
(ii) When the asset has been purchased on 1st Aril, 2016.

The annual depreciation charge in ________ remains fixed during the life of the asset. In contrast, the amount of depreciation in ______ method diminishes every year.

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