Question

An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the end of the period. Compute the depreciation charge and its book value after 10 years using straight-line method.                    Ans. P24,336.26

An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the end of the period. Compute the depreciation charge and its book value after 10 years using sinking fund method assuming i = 8%

                                                            Ans. d = P14,666.67

                                                             BV = P103,333.33

Answer 1

1) Solution: Depreciation: 14,666.67; Book value = 103,333.30

Working: Depreciation per year = (Cost of asset - Ending BV) / Life of asset

Depreciation per year = (250,000 - 30,000) / 15 years = 14,666.67

Depreciation for 10 years = 14,666.67 * 10 years = 146,666.67

BV at end of 10th year = 250,000 - 146,666.67 = 103,333.30