Calculate Depreciation Sample Assignment
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Original Cost 30,000
Less: Expected salvage value at the end of 10 years 2,00
28,000
Depreciable cost over 10 years
(a) Straight Line Method 28,000 = Rs. 2,800
Depreciation expense per year 10
Thus depreciation of three years: 2,800 X 3 =Rs. 8,400
( b) Diminishing Balance Method
Let us first calculate the rate of depreciation :
= 1-0.763 x 100 =23.7% rounded to 24%
Original cost of the asset Rs.
Less: Depreciation-year1@24% 30,000
7,00
22,800
Less: Depreciation-year2@24% 5,470
17,330
Less: Depreciation-year3@24% 4,160
13,170
Total Depreciation = Rs. 7,200 + Rs. 5,470 + Rs. 4,160/ = Rs. 16,830
Calculate Depreciation Sample Assignment
Q. A firm acquired an asset on 1 January 20x01 at a cost of Rs.30,000. The asset has 10 year life at the end of which it is expected to realize Rs. 2,000. What would be the depreciation of the first three years: (a) on a straight line basis? (b) on a diminishing balance basis?Solution:
Rs.Original Cost 30,000
Less: Expected salvage value at the end of 10 years 2,00
28,000
Depreciable cost over 10 years
(a) Straight Line Method 28,000 = Rs. 2,800
Depreciation expense per year 10
Thus depreciation of three years: 2,800 X 3 =Rs. 8,400
( b) Diminishing Balance Method
Let us first calculate the rate of depreciation :
= 1-0.763 x 100 =23.7% rounded to 24%
Original cost of the asset Rs.
Less: Depreciation-year1@24% 30,000
7,00
22,800
Less: Depreciation-year2@24% 5,470
17,330
Less: Depreciation-year3@24% 4,160
13,170
Total Depreciation = Rs. 7,200 + Rs. 5,470 + Rs. 4,160/ = Rs. 16,830
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