Rates of depreciation

(See section 5)

Rates of depreciation.

Type of building | Rate of depreciation per annum. (1) | (2)

1. Building built in lime mortar and in which teak has been used throughout. | 1 per cent. 2. Buildings built partly of brick in lime mortar and partly of brick in mud and in which teak has been used. | 1 ½ per cent. 3. Buildings built in brick in mud and in which country wood has been used. | 2 per cent. 4. Buildings which are inferior to those of class 3 with brick in mud plastered walls and mud floor and in which cheap country wood has been used. | 4 per cent

Explanation. - (1) The depreciation shall be calculated for each year on the net value arrived at after deducting the amount of depreciation for the previous year.

(2) The amount of depreciation shall in no case be less than ten per cent of the cost of the construction of the building.

(3) The actual depreciation of a building aged ‘n’ years is calculated by using the formula -

P = A (100-r) n / 100

Where A – total cost of construction of the building. r – rate of depreciation per annum. n – age of the building (i.e., the number of years). P – the final depreciated value of the building.

The amount of depreciation will be equal to ('A'-'P') subject to a minimum of ten per cent of 'A'.