The last method we are going to discuss is some of years digits, and this is also an accelerated depreciation
method.
In this matter, we first of all write down the number of years deject.
So if the life of an asset is five years, eight years desert are one, two, three, four and five.
So the first year is one second, there is two in this baby right down the years, digits digit.
Now, to calculate the precision value in any year, we take the remaining life of the asset in that
particular year.
And divide it by the sum of its digits.
This gives us the rate at which we will be depreciating, we multiply this date with the value to be
declined, our value to be lost.
So if we buy an asset for fifty thousand and it is sold off for 5000, the value lost is four to five
thousand.
We multiply this for the five with the rate calculated for that particular year.
This will give us the depreciation expense for that year.
Let us look at an example to understand it more clearly.
So we buy an asset for fifty thousand dollars and we sell it off for five thousand dollars after five
years.
Now, first, we will calculate the rate of depreciation rate is remaining life in the first year,
which will be five years low because it is the beginning of the life of the asset and it is going to
live for five years.
So remaining life is five years.
Some of your Digitas, one, two, three, four, plus five, this comes out of a 15.
So the rate is five by 15.
We multiply this with the value of assets to be declined, which comes out to be 50000 minus 5000,
which is 45000, we multiply 45000 with 550.
This gives us 15000 depreciation value for the first year.
Now, if I want to calculate the precision value for the second year, what is the change I need to
do?
The only change I need to do is change the remaining life from five to four in the second year, the
remaining four that I said will be for.
So when you multiply this with four by 15.
You'll get 12000 as the depreciation value.
So you can see that in the first year it was 15000, and yet it is 12000.
And in the later years it will further reduce.
In this way, this method is also accelerated depreciation in the initial years.
We do more reduction in the value of the asset and in the later years we do less reduction.
So these are the three depreciation methods that we are going to implement in Xolo.
Now, which deputization method is to be used by you?
That depends on a number of factors.
It depends on the country in which your organization is operating and where you are reporting your financial
statement.
Some countries do not accept some kind of depreciation method, so find out what depreciation method
is accepted by your organization and you will know how to implement it in exit.