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(Depreciation Computations
(Depreciation Computations
Solution
A) Depreciation under straight line method =( Cost - Salvage value)/ Number of years
= (315000-15000) / 10 i.e 30000
B) Depreciation under units of production method = Cost / Units expected to be produced *
Number of units produced
= 315000/240000 *25500 i.e 33469
C) Depreciation under numbers of hours worked bais = Cost / Expected total hours * Number of
hours worked
= 315000/25000*2650 i.e 33390
D) Sum of years digits = Depreciable base * Remaining life / sum of years
Depreciable base = Cost - Salvage value
= 315000-15000 i.e 300000
Sum of years = n(n+1)/2
= (10*11)/2 i.e 55
Calculation of depreciation under declining balance method
Depreciable amount = 300000
Annual rate = 20%
Year 1 = 315000*20%*2 i.e 126000
Year 2 = ((315000-126000)*20%*2 i.e 75600
Year 3 = (315000-126000-75600)*20%*2 i.e 45360
Years Depreciable Base Remaining life Depreciation factor Depreciation expense
1 300000 10 10/55 54545.45
2 300000 9 9/55 49090.90
3 300000 8 8/55 43636.36
4 300000 7 7/55 38181.81
5 300000 6 6/55 32727.27
6 300000 5 5/55 27272.72
7 300000 4 4/55 21818.18
8 300000 3 3/55 16363.63
9 300000 2 2/55 10909.09
10 300000 1 1/55 5454.54

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(Depreciation Computations (Depreciation Computations Solutio.docx

  • 1. (Depreciation Computations (Depreciation Computations Solution A) Depreciation under straight line method =( Cost - Salvage value)/ Number of years = (315000-15000) / 10 i.e 30000 B) Depreciation under units of production method = Cost / Units expected to be produced * Number of units produced = 315000/240000 *25500 i.e 33469 C) Depreciation under numbers of hours worked bais = Cost / Expected total hours * Number of hours worked = 315000/25000*2650 i.e 33390 D) Sum of years digits = Depreciable base * Remaining life / sum of years Depreciable base = Cost - Salvage value = 315000-15000 i.e 300000 Sum of years = n(n+1)/2 = (10*11)/2 i.e 55 Calculation of depreciation under declining balance method Depreciable amount = 300000 Annual rate = 20%
  • 2. Year 1 = 315000*20%*2 i.e 126000 Year 2 = ((315000-126000)*20%*2 i.e 75600 Year 3 = (315000-126000-75600)*20%*2 i.e 45360 Years Depreciable Base Remaining life Depreciation factor Depreciation expense 1 300000 10 10/55 54545.45 2 300000 9 9/55 49090.90 3 300000 8 8/55 43636.36 4 300000 7 7/55 38181.81 5 300000 6 6/55 32727.27 6 300000 5 5/55 27272.72 7 300000 4 4/55 21818.18 8 300000 3 3/55 16363.63 9 300000 2 2/55 10909.09 10 300000 1 1/55 5454.54