Correct Answer - Option 2 : Halsey’s 50-50 formula
Methods of determining depreciation:
There is reduction in the value of the equipment and other property of the plant every year due to depreciation. Therefore, a suitable amount, known as depreciation charge must be set aside annually so that by the time the life span of the plant is over, the collected amount equals the cost of replacement of the plant.
The following are the commonly used methods for determining the annual depreciation charge:
- Straight line method
- Diminishing value method
- Sinking fund method
Halsey plan: The standard time for the completion of a job is fixed and the rate per hour is then determined. If the time taken by a worker is more than the standard time, then he shall be paid according to the time rate, i.e. time taken multiplied by the rate per hour.