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Depreciation, Provisions and Reserves
explain basic factors affecting the amount of depr...

Question:
Explain basic factors affecting the amount of depreciation.

Answer:

The factors affecting the amount of depreciation:

1) Total Cost of asset
2) Estimated useful life of asset
3) Estimated Scrap Value

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Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.

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Question:
Explain basic factors affecting the amount of depreciation.

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Question:
Explain basic factors affecting the amount of depreciation.