Sum of Years of Digits Method
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Depreciation and AmortisationQ-2 | Depreciation and AmortisationQuestion 4738 of 42
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Detailed Solution & Explanation
Sum of Years of Digits Method:
♦ In this method the depreciation is calculated in the ratio of the remaining life of the asset
in the beginning of that year to the sum of digits of the life remaining for all the year.
Depreciation of the year = No. of years (including present year) of all remaining life of asset
Total of all digits of the life of the asset (in years)
About This Chapter: BRS & Inventories
Paper
Paper 1: Accounting
Weightage
20-25%
Key Topics
Reconciliation, Valuation, Depreciation
This chapter covers Reconciliation, Valuation, Depreciation and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 20-25% weightage. Focus on understanding core concepts rather than memorizing.
Key Concepts to Understand
Related Comparison Tables
More Questions from Depreciation and Amortisation
The following details are available of raw material of a manufacturing unit : 1-5-2024 Opening Inventory 100 units @ Rs. 15 per unit 2-5-2024 Purchases 300 units @ Rs. 18 per unit 5-5-2024 Issued for consumption 250 units 16-5-2024 Purchases 500 units @ Rs. 21 per unit 21-5-2024 Issued for consumption 100 units 25-5-2024 Issued for consumption 450 units The manufacturer also incurred the following expenses: ◆ Freight of 300 and unloading charges of 150 at the time of every purchase respectively. ◆ Warehouse rent of ₹ 2,000 per month. ◆ Administrative Expenses of ₹ 1,500 per month. You are required to find out the value of inventory as on May 31, 2024 if the company follows: (a) Weighted Average method for inventory valuation. (b) First in First Out method for inventory valuation. [Jan. 2025, Marks 5]
Meaning of depreciation
Depletion method
Discuss the factors taken into consideration for calculation of depreciation. [Nov. 2020, 5 Marks]
Amortisation [Dec. 2021, 1 Mark]
Diminishing Balance Method [Dec. 2023, 1 Mark]
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