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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Under Revaluation Method of Depreciation, where we did not know the accurate life of an asset or where the life of an asset is uncertain and depreciation cannot be calculated with any other method then we will reevaluate an asset at the end of each financial year when balance sheet prepared. So, if any decrease in the book of an asset will be treated as the amount of depreciation or if any increase then it will be ignored.
On 1st April 2018, The firm has loose tools worth Rs 21,000. These were valued at the end of each financial year shown as follows:-
Calculate the amount of depreciation.
"Note: - To make a simple question we assume that no loose tool was broken in the whole period. "
Calculation of the amount of depreciation:-
The following table shows the calculation of an amount of depreciation year by year:-
Year start |
Opening Value of Assets |
Year ended |
Closing Value of Assets |
Amount of Depreciation |
|---|---|---|---|---|
| 01-04-2018 | 21,000 | 31-03-2019 | 18,900 | 2,100 |
| 01-04-2019 | 18,900 | 31-03-2020 | 17,700 | 1,200 |
| 01-04-2020 | 17,700 | 31-03-2021 | 16,550 | 1,150 |
| 01-04-2021 | 16,550 | 31-03-2022 | 15,250 | 1,300 |
| 01-04-2022 | 15,250 | 31-03-2023 | 14,150 | 1,100 |
Journal entries or ledger are the same with the following methods:
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
Under Revaluation Method of Depreciation , where we did not know the accurate life of an asset or where the life of an asset is uncertain and depreciation…
Class 11 and Class 12 commerce students, and CA Foundation aspirants, studying Financial Accounting.
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