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. Practical Income Tax
2. Income Tax for Audit Cases (Non Co)
3. Depreciation Calculation as per Income Tax

Depreciation Calculation as per Income Tax

Practical Income Tax
Income Tax for Audit Cases (Non Co) 