In: Finance
QUESTION 1
An equipment was acquired at a cost of RM300,000. Its estimated useful life is five years. It is expected that the salvage value for the equipment is RM50,000. Using the sum of year digit method, calculate and prepare the depreciation expenses and schedule for the five years.
Since the useful life is 5 years, denominator = 5+4+3+2+1 = 15
Year | Depreciation Base | Remaining Life of Equipment | Depreciation Fraction | Depreciation | Book Value |
RM | RM | RM | |||
1 | 250,000 | 5 | 5/15 | 83,333.33 | 216,667 |
2 | 250,000 | 4 | 4/15 | 66,666.67 | 150,000 |
3 | 250,000 | 3 | 3/15 | 50,000.00 | 100,000 |
4 | 250,000 | 2 | 2/15 | 33,333.33 | 66,667 |
5 | 250,000 | 1 | 1/15 | 16,666.67 | 50,000 |
Excel formulas used: