News Factors Affecting The Sum Of Depreciation
It is close impossible to calculate the actual in addition to accurate sum of depreciation. However, to guess the sum of depreciation next factors are considered:
1. Original Cost of the Assets: Original cost includes the buy cost of the property addition freight in addition to installation expenses. Depreciation is charged on cost of property so, it is constitute as:
Cost of Asset = Purchase cost Freight (Transportation expenses) Installation (erection) expenses
2. Estimated Working Life of the Asset: All the fixed assets get got their working life which tin laissez passer the sack hold upward estimated precisely non predetermined. After this period, the assets volition hold upward worthless or scrap. The working life of property plays vital constituent inwards the conclusion of depreciable amount.
3. Scrap Value: Scrap value is too called equally salve or balance or final value which agency to the value that volition hold upward realized past times selling the property afterward the drib dead of the estimated working life. Such sum must hold upward deducted inwards cost of assets inwards the calculation of depreciation.
4. Other Factors: The next points should too hold upward taken into consideration spell computing the sum of depreciation:
(i) Addition to the asset
(ii) Sale of the asset
(iii) Statutory provisions amongst regard to Income Tax Act or Companies Act etc.