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Time management is very much important in IIT JAM. The eduncle test series for IIT JAM Mathematical Statistics helped me a lot in this portion. I am very thankful to the test series I bought from eduncle.
Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
- UGC NET
- Commerce
D D (D 3 D ass ab
sir explain me these two methods i am unable to understand it
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Kaur![best-answer]()
in annuity method , you are losing not only the cost of purchasing an asset but also the interest. take a situation where you would have invested the money outside your business and you would got some interest out of it.. but now as you have purchased the asset , your opportunity to earn interest is gone.. there fore you apply the annuity table value to calculate the depreciation taking both the cost and loss of interest that you face . in sinking fund method , you calculate the amount of depreciation and invest that amount in securities which could be govt securities or other securities outside the business. the return that you earn on such investment that you have made with amount of depreciation , you reinvest it and this continues till the life of an asset . in the end the amount equal to the cost of asset is taken aside and while amount is now used to buy a new asset . the point to note is that amount earned from investment in securities is first transfered to the account and then reinvested.. this provides with amount set aside in sinking fund account which reduces your responsibility to hold working capital to some extent .