Original cost example sentences

Cost (also known as original cost or historical cost) of an asset includes invoice price and other costs, which are necessary to put the asset in use or working condition.This method is also known as fixed percentage on original cost method because same percentage of the original cost (infact depreciable cost) is written off as depreciation from year to year.In this case the original cost of the machine is Rs.The amount annually charged as depreciation is such that it reduces the original cost of the asset to its scrap value, at the end of its useful life.The concerned variables are the original cost of the asset, depreciation accumulated on the asset upto date, sale price of the asset, value of the parts of the asset retained for use, if any and the resultant profit or loss on disposal.Whereas in written down value method, the basis of charging depreciation is net book value (i.e., original cost less depreciation till date) of the asset, in the beginning of the year.The original cost of the asset being sold is debited to the asset disposal account and accumulated depreciation amount appearing in provision for depreciation account relating to that asset till the date of disposal is credited to the asset disposal account.Under straight line method depreciation is calculated on original cost while under written down value method it is calculated on written down value.The original cost or historical cost is the basis of recording transactions.In straight line method, depreciation is charged on the basis of original cost or (historical cost).