List out the various methods of depreciation.

What is annuity method?

A firm purchased a plant for Rs. 40,000. Erection charges amounted to Rs. 2,000. Effective life of the plant is 5 years. Calculate the amount of depreciation per year under straight line method

Furniture was purchased for Rs. 60,000 on 1-7-2016. It is expected to last for 5 years. Estimated scrap at the end of five years is Rs. 4,000. Find out the rate of depreciation under straight line method.

A firm acquired a machine on 1st April 2015 at a cost of Rs. 50,000. Its life is 6 years. The firm writes off depreciation @ 30% p.a. on the diminishing balance method. The firm closes its books on 31st December every year. Show the machinery account and depreciation account for three years starting from 1st April 2015.

On 1.1.2017 a firm purchased a machine at a cost of Rs.1,00,000. Its life was estimated to be 10 years with a scrap value of Rs.10,000. Compute the amount of depreciation to be charged at the end of each year.

Find out the rate of depreciation under straight line method from the following details:
Original cost of the asset = Rs.10,000
Estimated life of the asset = 10 years
Estimated scrap value at the end = Rs.2,000

Calculate the amount of depreciation and depreciation rate from the following by using ‘straight line method’. Also give journal entries for the first two years. The books are closed on 31st December every year.

January 1, 2016 Payment to vendor for purchase of machinery	Rs.2,00,000
January 1, 2016 Transportation cost	Rs.2,000
January 1, 2016 Installation cost	Rs.18,000
Estimated scrap value at the end of the life	Rs.10,000
Estimated life	10 years

What do you mean by a depreciable asset? 

State any two merits of Straight line method.