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# Introduction To Accounting: Part 15: Cost Concept Or Historical Cost Concept

Nishant Kumar
28/06/2017 0 0

8. #### For example, a computer is purchased for Rs 50,000 on 01.04.2017 and is expected to be used for 5 years. Now, at the time of purchase, i.e. on 01.04.2017, the computer will be recorded in the books of accounts at Rs 50,000. Since the useful life is 5 years, Rs 10,000 will be deducted from the cost of Rs 50,000 every year, so that, after 5 years, the value of the computer becomes NIL. Therefore, on 31.03.2018, Rs 10,000 will be deducted from Rs 50,000 and the computer will now be shown in the Financial Statements at Rs 40,000. Similarly, on 31.03.2019, another Rs 10,000 will be deducted from Rs 40,000 and now the computer will be shown in the Financial Statements at Rs 30,000.

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