CBSE Sample Papers

CBSE Sample Papers from CBSEtuts.com

Depreciation Method – Machine hour rate method

March 7, 2019 by admin Leave a Comment

Machine hour rate method. This is also known as Service Hours Method. This method lakes into account the running time of the asset for the purpose of calculating depreciation. The method is particularly suitable for charging depreciation on plant and machinery, air-crafts, etc. The amount of depreciation is calculated as follows:

Original Cost of the Asset — Scrap Value/ Life of the Asset in hours 

For example, if a machine (having a scrap value of Rs 1,000) is purchased for Rs 20,000 and it has an effective life of 10 years of 1,000 hours each, the amount of depreciation per hour will be computed

The method has the advantage of correlating the charge for depreciation, to the actual working time of the machine. However, this method can he used only in case of those assets whose life can be measured in terms of working time.

 

Filed Under: Depreciation Tagged With: Depreciation Method, Machine hour rate method

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • Note Making Class 11 CBSE Format, Examples
  • Unseen Passage For Class 11 Literary CBSE With Answers
  • Unseen Passage for Class 11 Discursive CBSE with Answers
  • Unseen Passage for Class 11 Factual CBSE With Answers
  • Rearrange Jumbled Sentences for Class 11 CBSE with Answers
  • Error Correction Exercises for Class 11 CBSE with Answers
  • Sentence Transformation Exercises for Class 11 CBSE with Answers
  • Editing Exercises for Class 11 CBSE with Answers
  • Active and Passive Voice Exercises for Class 11 with Answers CBSE
  • Tenses Exercises for Class 11 CBSE With Answers

Copyright © 2021 · Magazine Pro Theme on Genesis Framework · WordPress · Log in