A machine costing Rm 100,000 has a life expentancy of five years and a salvage value Rm 20,000

A machine costing Rm 100,000 has a life expentancy of five years and a salvage value Rm 20,000. Calculate: a) accumulated depreciation b) book value at the end of three years using the straight line method

Solutions

Expert Solution

a. Accumulated depreciation at the end of three years = Annual Depreciation x 3 years

= Rm 16,000 x 3 years

= Rm 38,000

b. Book value at the end of three years = Cost of machine - Accumulated depreciation

= Rm 100,000 - Rm 38,000

= Rm 62,000

Working:

Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life of the assets

= (Rm 100,000 - Rm 20,000) / 5 years

= Rm 16,000

DEEPIKA GOYAL answered 1 year ago

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