We know that there are 2 methods of depreciation

1.WDV Method (Written down Value Method)

2.SLM Method (Straight Line Method)

#### WDV Method

Suppose Asset Value is 5000 and Depreciation Rate is 10% WDV.

Depreciation will be computed as follows

 Year 1 Year 2 Year 3 Opening Value 5000 4500 4050 Less Dep 10% 500 450 405 Closing Value 4500 4050 3645

Hence Closing Value of One Year becomes opening Value of Next Year on which Depreciation is calculated

Entry Passed

Year 1

Depreciation A/c  Dr 500

To Asset  500

Year 2

Depreciation A/c  Dr 450

To Asset           450

Year 3

Depreciation A/c  Dr 405

To Asset  405

#### SLM Method

EXAMPLE

Suppose Asset Value is 5000 and Depreciation Rate is 10% SLM.

Depreciation will be computed as follows

 Particulars Year 1 Year 2 Year 3 Opening Value 5000 4500 4000 Less Dep 10% 500 500 500 Closing Value 4500 4000 3500

Hence, depreciation value is same every year in SLM Method

Entry Passed here also is

Depreciation A/c Dr 500

To Asset  500

Depreciation A/c  Dr 500

To Asset  500

Depreciation A/c  Dr 500

To Asset  500

1. Accounts and Finance
2. Step 3 Passing Book Closure Entries
3. Depreciation Entries

Depreciation Entries

Accounts and Finance
Step 3 Passing Book Closure Entries 