Question

vill for P7-10 (ICE. Board, October 1988) A tax and duty free importation of a 30-horsepower sandmill paint manufacturing costs P360,000. Bank charges, arrastre brokerage cost P5,000. Foundation and installation costs we P25,000. Other incidental expenses amount to P20,000. Salva value of the mill is expected to be P60,000 after 20 years. the appraisal value of the mill using straight line depreciat! at the end of (a) 10 years, (b) 15 years. 0 years. Find preciation

Answer 1

Hi,

so to begin with, we first calculate straight line depreciation on the asset purchased.

Purchase Cost - 360,000/-

Other Costs - 5,000/- + 25.000/- + 20,000/- = 50,000/-

Total costs - 410,000/-

salvage value - 60,000/-

Depreciation - 410,000/- - 60,000/- divided by 20 years. = 17,500/-

So to calculate value of mill after

a) 10 years would be - 410,000 - (17,500*10) = 235,000$

b) 15 years would be - 410,000 - (17,500*15) = 147,500$

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