a. Straight line method of depreciation | |||||||||
Rate of depreciation = 1/useful life of equipment*100 | |||||||||
Rate of depreciation = 10% | |||||||||
Year | Depreciable cost | x | Rate(SL) | = | Depreciation expense | Accumulated Depreciation | Book value | ||
1 | 186000 | x | 6.67% | = | 12400 | 12400 | 197600 | 10%*8/12 = 6.67% | |
2 | 186000 | x | 10% | = | 18600 | 31000 | 179000 | ||
b. Double-Declining method | |||||||||
Rate of depreciation = SLM depreciation rate *2 = 20% | |||||||||
Year | Depreciable cost | x | Rate(SL) | = | Depreciation expense | Accumulated Depreciation | Book value | ||
1 | 210000 | x | 20%*8/12 | = | 28000 | 28000 | 182000 | ||
2 | 182000 | x | 20% | = | 36400 | 64400 | 145600 | ||
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