I have to depreciation on car , car value is 500,000 , which method do I have to follow and how to pass this method? Please reply my that question.

SLM METHOD BEST BCOS WITHIN FIXED PERIOD WE CAN WRITTEN OFF THE ASSET AND KINDLY USE PROV.FOR DEPRICIATION METHOD FOR DEPRICIATE THE ASSETS THIS METHOD ASSET VALUE SHOW SAME BALANCE AND DEPRICIATION VALUE SHOW SEPARATE THEN FINALLY SOLD THE ASSET TRF THE BALANCE AND NULLUIFY THE BOOK OF ACCOUNTS

Thanks for invitation

The best method to use to depreciate the car is the reducing balance method. The method assumes that future benefits associated with the asset decline more in the earlier years of the asset's life than in the earlier years. In most cases the cost of repairs rises as the asset becomes older, and so this method, when the cost of repairs is added, produces a more even cost of using an asset over its total life. The method applies a pre-calculated percentage to the written-down value or the carrying value to ascertain the charge for the year.

Entries

Dr depreciation expense account (Income statement)

Cr Car asset account ( to reduce the value)

There are two methods to follow Straight Line method (SLM) or Writted Down Value Method (SLM).

under SLM method Depreciate amount will be (Value of car - Resale value (at the end of Life time of car)) / Total life of car. At the value of car will be comes to zero

Under WDV, Depreciate amount will be a certain percentage  on the value of asset. under this the value of car never comes to zero.

Example. Under SLM.

Car value 500,000, Life time 10 years, resale value ZERO.

Depreciation amount (500000-0) / 10 = 50000, in each year.

Under WDV

Depreciation rate = 10%.

Depreciation for first year = 500000*10%=50000

Second year = (500000-50000) = wdv

=450000*10%=45000.

Accounting treatment.

Depreciation A/c Dr  

   To Car A/c.

(Being Depreciation Charged)

P&L A/c Dr

   to Depreciation Ac 

(Depreciation Trf to P&L Ac at the end of the period)