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2 cards from this section. Quick, good the night before a test.
What is depreciation?
Think about how wear and tear affects equipment.
What is salvage value?
Consider what an asset might sell for after it’s been used.
What is the main reason companies might switch depreciation methods?
Think about the risks of depreciation strategies.
True or False: The Straight-Line method always provides higher annual depreciation than the DDB method.
Consider what happens to depreciation over time.
An asset costs ₹10,000, has a salvage value of ₹2,000, and is expected to last 5 years. Determine the first year's depreciation using both DDB and Straight-Line methods and decide which to use.
Calculate both methods and compare them.
If an asset initially worth ₹50,000 depreciates at DDB, and its book value reaches ₹25,000, but the salvage value is ₹30,000, explain the implications.
Think about the need to maintain the salvage value in financial reports.
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