Question

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Depreciation
For the following, calculate Annual Depreciation, Accumulated Depreciation and Net
Book Value on an MRI Machine. Cost of the machine is $450,000 & useful life is 8
years. Use the Straight Line Method of Depreciation. Assume a Salvage Value of $20,000.
				Depreciation
			Cost to be	Expense Per	Accumulated	Net
		Year	Depreciated	Year	Depreciation	Remaining
		1
		2
		3
		4
		5
		6
		7
		8

Answer 1

i	Cost =		460000
ii	Salvage value =		20000
iii=i-ii	Depreciable cost =		440000
iv	use full life =		8	year
v=iii/iv	Annual depreciation =		55000
			Depreciation
		Cost to be	Expense Per	Accumulated	Net
	Year	Depreciated	Year	Depreciation	Remaining
	1	460000	55000	55000	405000
	2	405000	55000	110000	350000
	3	350000	55000	165000	295000
	4	295000	55000	220000	240000
	5	240000	55000	275000	185000
	6	185000	55000	330000	130000
	7	130000	55000	385000	75000
	8	75000	55000	440000	20000

Depreciation expenses is fixed at 55000 every year.

Accumulated depreciation is cumulative depreciation. In year 1 its 55000, in year 2 its 55000*2 year 3 its 55000*3 .. Etc..

Net remaining = Cost to be depreciated - Depreciation expenses .

Cost to be depreciated is last year balance of net remaining