Which of the following is correct formula for charging depreciation under fixed instalment method?

Depreciation =

\frac{S c r a p V a l u e - O r i g i n a l c o s t}{L i f e o f t h e a s s e t}

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Depreciation =

\frac{L i f e o f t h e a s s e t - S c r a p V a l u e}{O r i g i n a l c o s t}

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Depreciation =

\frac{O r i g i n a l C o s t - S c r a p V a l u e}{L i f e o f t h e a s s e t}

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Depreciation =

\frac{S c r a p V a l u e - L i f e o f t h e a s s e t}{O r i g i n a l c o s t}

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Solution

The correct option is C Depreciation = $\frac{O r i g i n a l C o s t - S c r a p V a l u e}{L i f e o f t h e a s s e t}$
Fixed Installment Method or Equal Installment Method or Straight Line Method or Fixed Percentage or Original Cost Method: In this method a fixed or equal amount of depreciation written off as depreciation at the end of each year, during the life time of the asset.

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