A central air-conditioning unit was purchased in 2012 for P25Million and has an expected life of...
A central air-conditioning unit was purchased in 2012 for P25Million and has an expected life of 10 years and a salvage value of P5Million. What will be the book value at the end of 7 years for a) straight-line depreciation; b) SYD; and c) double-declining balance depreciation
TOPIC: DEPRECIATION
SUBJ: ENGINEERING ECONOMY
Homework Answers
a) Straight-line depreciation amount = (25,000,000 - 5,000,000) / 7 = 2,000,000
The depreciation schedule is given below.
Book value at the end of year 7 = $11,000,000
b) Sum of the year = n(n + 1) / 2 = 10(10 + 1) / 2 = 55
Depreciation base = 25,000,000 - 5,000,000 = $20,000,000
Book value at the end of year 7 = $7,181,818.18
c) Double- declining depreciation rate = 2 / n = 2 / 10 = 0.2
Book value at the end of year 7 = $5,242,880
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