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Similar to Depreciation methods
Similar to Depreciation methods (20)
Depreciation methods
- 3.
A reduction in the value of an asset with the passage
of time, due in particular to wear and tear.
Defination
- 4. Here The Four Methods are described:
Straight Line Method
MACR’S Method
Double Decline Method
Sum Of The Year Method
Methods
- 6.
10,000 cost - 500 salvage value/5 = 2000 per year
year cost Depreciation Accumulated Book
Expense Depreciation Value
1 10,500 2,000 2,000 8,500
2 10,500 2,000 4,000 6,500
3 10,500 2,000 6,000 4,500
4 10,500 2,000 8,000 2,500
5 10,500 2,000 10,000 0
- 7.
cost =2,50,000
year cost Depreciation Accumulated Book
Expense Dep value
1 250000*35% 87,500 87,500 162500
2 250000*15% 37500 12500 125000
3 250000*20% 50000 175000 75000
4 250000*15% 37500 212500 37500
5 250000*15% 37500 250000 0
MACR’S(Modified Accelerated cost Recovery System)
- 9. Cost Depreciation Accumulated Book
Dep value
250000*6/21 71428.57 71428.57 178571.43
250000*5/21 59523.80 130952.37 119047.63
250000*4/21 47619.04 178571.41 71428.59
250000*3/21 35714.28 214285.69 3571.31
250000*2/21 23809.52 238095.21 11904.76
250000*1/21 11904.76 2,50,000 0
- 10.
Cost of asset = $100,000
Estimated residual value = $10,000
Estimated useful life of asset = 5 years
Depreciation rate = (1/useful life) x 200%
= 1/5 x 200% = 20% x 2 = 40%
Double Declining Balance
Method
- 11.
Cost Depreciation Accumulated Book
Dep value
100000*40% 40000 40000 60000
60,000*40% 24000 64000 36000
36000*40% 14400 78400 21600
21600*40% 8640 87040 12960
12960*40% 2960(*) 90000 10000
(*)
Depreciation stops when book value=Residual value