Issue

This paper seeks to estimate sectorial

depreciation from 1948-49 to 1959-60 in
National level.

According to article

THE basic data needed for calculating

depreciation for any sector are:
1) The total value of existing capital stock
in use
2) The price series of assets and
3) The life-span of the long-term assets.

1.
2.
3.
4.

There are four steps of

getting series of
depreciation in National
level: figures
Collection depreciation
Estimation of depreciation
Index number
Getting the series of Depreciation

Step 1:
The collection of figures of
depreciation

The method of collection of depreciation Figure

for the different sectors depends largely on
the nature of the available source materials.
Figures available can be characterized in two
types according to theirs source of origin.
First Type are:
Figures from rural and urban survey data
National Sample Survey (NSS)
private individuals and
official and non-official bodies

Step 1:
The collection of figures of depreciation

The second category of data consisted of

ready materials prepared by the
organization's.

Balance-sheet analysis
Depreciation figures obtained from the
Census of Manufacture
Depreciation figures obtained from Sample
Survey of Manufacturing Industries
Annual Reports

Step2:
Depreciation estimation

One of the TWO method to estimate Depreciation is

Straight-line Method of Depreciation.

In straight line depreciation method, depreciation is
charged uniformly over the life of an asset.
We first subtract residual value of the asset from its
cost to obtain the depreciable amount.
The depreciable amount is then divided by the
useful life of the asset in number of accounting
periods to obtain depreciation expense per
accounting period.
Formula
Depreciation = (Cost Residual Value)
Life in Number of Periods

Step2:
Depreciation estimation

Second method to estimate Depreciation

is from the use of national Income
The difference between the gross and net
products has been regarded as the
provisional figure of depreciation in each
year in each sector.

Formula
NNP= GDP - Depreciation
Depreciation= GDP - NNP

Step3:
Index number

The next step in the procedure is to

calculate a series of index numbers of the
newly calculated depreciation in each of
the sectors

Formula
Index Number = Current Value x 100
Base Value

Step4:
Series of Depreciation

Lastly, the actual figures of depreciation

in each of the sectors for 1960-61 have
been extended back up to 1948-49 with
the help of the above-mentioned index
numbers of depreciation for the
corresponding sectors in the conventional
series to get he series of depreciation.