1 00:00:00,580 --> 00:00:08,470 The last method we are going to discuss is some of years digits, and this is also an accelerated depreciation 2 00:00:08,470 --> 00:00:08,850 method. 3 00:00:10,360 --> 00:00:15,790 In this matter, we first of all write down the number of years deject. 4 00:00:16,810 --> 00:00:25,240 So if the life of an asset is five years, eight years desert are one, two, three, four and five. 5 00:00:26,840 --> 00:00:33,020 So the first year is one second, there is two in this baby right down the years, digits digit. 6 00:00:34,370 --> 00:00:42,740 Now, to calculate the precision value in any year, we take the remaining life of the asset in that 7 00:00:42,740 --> 00:00:43,430 particular year. 8 00:00:44,550 --> 00:00:47,480 And divide it by the sum of its digits. 9 00:00:48,570 --> 00:00:56,280 This gives us the rate at which we will be depreciating, we multiply this date with the value to be 10 00:00:56,550 --> 00:00:58,930 declined, our value to be lost. 11 00:00:59,760 --> 00:01:07,830 So if we buy an asset for fifty thousand and it is sold off for 5000, the value lost is four to five 12 00:01:07,830 --> 00:01:08,220 thousand. 13 00:01:09,470 --> 00:01:14,150 We multiply this for the five with the rate calculated for that particular year. 14 00:01:15,260 --> 00:01:18,290 This will give us the depreciation expense for that year. 15 00:01:19,790 --> 00:01:22,850 Let us look at an example to understand it more clearly. 16 00:01:24,890 --> 00:01:31,190 So we buy an asset for fifty thousand dollars and we sell it off for five thousand dollars after five 17 00:01:31,190 --> 00:01:31,550 years. 18 00:01:34,080 --> 00:01:42,000 Now, first, we will calculate the rate of depreciation rate is remaining life in the first year, 19 00:01:42,780 --> 00:01:49,290 which will be five years low because it is the beginning of the life of the asset and it is going to 20 00:01:49,290 --> 00:01:50,250 live for five years. 21 00:01:50,250 --> 00:01:51,840 So remaining life is five years. 22 00:01:52,810 --> 00:01:59,110 Some of your Digitas, one, two, three, four, plus five, this comes out of a 15. 23 00:02:00,150 --> 00:02:02,160 So the rate is five by 15. 24 00:02:04,480 --> 00:02:11,050 We multiply this with the value of assets to be declined, which comes out to be 50000 minus 5000, 25 00:02:11,320 --> 00:02:17,380 which is 45000, we multiply 45000 with 550. 26 00:02:18,710 --> 00:02:23,690 This gives us 15000 depreciation value for the first year. 27 00:02:24,860 --> 00:02:31,010 Now, if I want to calculate the precision value for the second year, what is the change I need to 28 00:02:31,010 --> 00:02:31,250 do? 29 00:02:32,540 --> 00:02:39,740 The only change I need to do is change the remaining life from five to four in the second year, the 30 00:02:40,070 --> 00:02:41,960 remaining four that I said will be for. 31 00:02:43,790 --> 00:02:47,450 So when you multiply this with four by 15. 32 00:02:48,760 --> 00:02:51,940 You'll get 12000 as the depreciation value. 33 00:02:53,560 --> 00:02:58,400 So you can see that in the first year it was 15000, and yet it is 12000. 34 00:02:58,810 --> 00:03:01,570 And in the later years it will further reduce. 35 00:03:02,650 --> 00:03:08,270 In this way, this method is also accelerated depreciation in the initial years. 36 00:03:08,290 --> 00:03:14,530 We do more reduction in the value of the asset and in the later years we do less reduction. 37 00:03:16,260 --> 00:03:21,420 So these are the three depreciation methods that we are going to implement in Xolo. 38 00:03:23,310 --> 00:03:27,060 Now, which deputization method is to be used by you? 39 00:03:28,370 --> 00:03:30,380 That depends on a number of factors. 40 00:03:30,650 --> 00:03:37,730 It depends on the country in which your organization is operating and where you are reporting your financial 41 00:03:37,730 --> 00:03:38,290 statement. 42 00:03:39,370 --> 00:03:46,240 Some countries do not accept some kind of depreciation method, so find out what depreciation method 43 00:03:46,360 --> 00:03:52,380 is accepted by your organization and you will know how to implement it in exit.