SOLUTION : 1 | ||||||
CALCULATION OF THE DEPRECIATION AS PER SUM OF DOUBLE DECLINE METHOD | ||||||
Purchase Cost of Machine | $ 7,10,000 | |||||
Useful Life = | 10 years | |||||
Depreciation per year = | $ 71,000 | |||||
(Purchase price / Useful life) | ||||||
CALCULATION OF THE RATE OF DEPRECIATION | ||||||
Rate of Depreciation = | $ 71,000 / $ 710,000 | |||||
(Depreication / Purchase price ) | ||||||
Rate of Depreciation = | 0.10 or 10% | |||||
Double decline deprection rate = 10% * 2 = | 20% | |||||
Purchase price = | $ 7,10,000 | |||||
Depreciation for the year 1 | $ 1,42,000 | |||||
Closing balance for the year 1 | $ 5,68,000 | |||||
Opening Balance for the year 2 | $ 5,68,000 | |||||
Depreciation for the year 2 | $ 1,13,600 | |||||
Closing balance for the year 2 | $ 4,54,400 | |||||
Answer = Option 4 =$ 113,600 | ||||||
SOLUTION : 2 | ||||||
The term "Depreciable base" refers to = The cost of the assets less related depreciation recorded to date | ||||||
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