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  • Annuity Method of Depreciation

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    SaravananSrvn
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    A firm purchased a 5-year lease for Rs. 30,000 and decided to depreciate it using the annuity method with an interest rate of 5% per year. Using an annuity table showing that an annuity of Re. 1 for 5 years at 5% is 0.230975, the document calculates that the annual depreciation to charge is 0.230975 x 30,000 = Rs. 6,929.25.

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    Annuity methods

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    A firm purchased a 5-year lease for Rs. 30,000 and decided to depreciate it using the annuity method with an interest rate of 5% per year. Using an annuity table showing that an annuity of Re. 1 for 5 years at 5% is 0.230975, the document calculates that the annual depreciation to charge is 0.230975 x 30,000 = Rs. 6,929.25.

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    183 views1 page

    Annuity Method of Depreciation

    Uploaded by

    SaravananSrvn
    A firm purchased a 5-year lease for Rs. 30,000 and decided to depreciate it using the annuity method with an interest rate of 5% per year. Using an annuity table showing that an annuity of Re. 1 for 5 years at 5% is 0.230975, the document calculates that the annual depreciation to charge is 0.230975 x 30,000 = Rs. 6,929.25.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
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    Annuity Method of Depreciation

    Periodic payment required to amortize Re. 1 and interest An extract of an Annuity Table

    A firm purchases a 5-year lease for Rs.30, 000. It decided to write off depreciation on the annuity
    method, presuming the rate of interest to be 5% per annum. If annuity of Re. 1 for 5 years at 5% is
    0.230975, show the Lease Account for full period.

    Solution: The amount of depreciation to be charged every year = 0.230975 x 30000 = Rs.6, 929.25

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