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Explain revaluation method to calculate depreciation
Under this method the fixed assets are valued at the end of each accounting period. The difference between the value at the beginning of the period and the value at the end of the period represents the depreciation value which is charged against the profit and loss account. This method is used in case of assets like loose tools, packages, Farmers’ livestock etc.
Formula for Calculating:
Depreciation = Value of asset at the end – Value of asset at the beginning + Any new purchases
Explain renewal method to calculate depreciation.
In this method the full cost of the asset is charged as depreciation during the period in which the asset is renewed. No depreciation is charged in between the period. This method can be used if the asset is of small value and is renewed frequently.
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