'IAS16'                      ''DEPRECIATION''

Property plant and equipment:-

According to IAS the property, plant and equipment as tangible assets item that are held  for the use in production or supply of goods or services for rental to other or for administration purpose and expected to be used during more than one accounting period and treated as long term or fix assets.

Depreciation:-

                                 The benefit drive from the useful life the assets is called depreciation .

                             

There are two types of depreciation

1.     fixed base/original cost/ straight line method

2.     written down method/diminishing balance method

Fixed based/original/straight line method

                                                                                            First of all I want to explain to the fixed based method in which method the depreciation is fixed and charge on the original value of an assets that's why this method is called fixed base method.

Depreciation = original cost – residual value

                                Estimated life

Original cost= 100000 residual value 10000 estimated life is 5 years. Prepare the 2 year depreciation account

We can find the depreciation;

Depreciation= 100000-10000

                                    5

Depreciation =18000

The value after year =100000-36000(18000+18000)

                                = 64000

The depreciation of both years sane that’s why this method is called fixed method

Written down method/diminishing balance method

                                                                                         The 2nd method is written down value method in which method depreciation is charged on the book value (original value - depreciation) of assets. The percentage is given in the question and this percentage is calculated at the book value of the assets .

Explanation of this picture

This picture shows that's when assets are purchased then he his performance or market value in highest position but with the passage of time or the use of assets in business the value of assets are decreased and few place where the value of the assets are increase instead of decreased this position is called appreciation of an assets. Appreciation is the process when the value of an assets is increased instead of decreased.

'Accelerated Depreciation'

This also the method of depreciation which is used in accounting and income tax purpose

''Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset''.