Homework Answers
a) Depreciation p.a. using straight line = (Cost - Salvage)/Useful life = (50000-30000)/4 = 5000
Book value at the end of second year = 50000-5000-5000 = 40000
b) Sum of digits of the year = 1+2+3+4+5 = 15
Depreciable cost = 50000-10000 = 40000
Depreciation for first yr = (Remaining useful life of asset/ Sum of the years digits)* Depreciable cost
= (5/15)*40000 = 13333.33
Depreciation for second yr = (4/15)*40000 = 10666.67
Book value at the end of second year = 50000-13333.33-10666.67 = 26000
c) Straight line depreciation p.a = (20000-2000)/3 = 6000
Straight line rate = 6000/18000 = 33.33%
Declining balance annual rate of depreciation = 33.33%*2 = 66.67%
d) Straight line depreciation = (60000-10000)/5 = 10000
| Year | Beginning value | Depreciation amount | Accumulated depreciation | Ending book value |
| 1 | 60000 | 10000 | 10000 | 50000 |
| 2 | 50000 | 10000 | 20000 | 40000 |
| 3 | 40000 | 10000 | 30000 | 30000 |
| 4 | 30000 | 10000 | 40000 | 20000 |
| 5 | 20000 | 10000 | 50000 | 10000 |
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