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Calculate depreciation (create schedule - excel is fine) of an asset costing $5,000,000, depreciating at a...

Calculate depreciation (create schedule - excel is fine) of an asset costing $5,000,000, depreciating at a rate of 10% per annum (diminishing value), having a life of 12 years and salvage value of $900,000 at the end of life.

Please show working out / formulas used.

Solutions

Expert Solution

Calculation of Depreciation as per Diminishing Value Method
Year Value of Assest (A) Rate of Dep. (B) Amount of Dep (At the End of Year) Closing Value of Assets
( C ) = (A) x (B) (D) = (A) - ( C )
1                             50,00,000.00 10%                   5,00,000.00             45,00,000.00
(A) = Closing Value of Last Year 2                             45,00,000.00 10%                   4,50,000.00             40,50,000.00
(A) = Closing Value of Last Year 3                             40,50,000.00 10%                   4,05,000.00             36,45,000.00
(A) = Closing Value of Last Year 4                             36,45,000.00 10%                   3,64,500.00             32,80,500.00
(A) = Closing Value of Last Year 5                             32,80,500.00 10%                   3,28,050.00             29,52,450.00
(A) = Closing Value of Last Year 6                             29,52,450.00 10%                   2,95,245.00             26,57,205.00
(A) = Closing Value of Last Year 7                             26,57,205.00 10%                   2,65,720.50             23,91,484.50
(A) = Closing Value of Last Year 8                             23,91,484.50 10%                   2,39,148.45             21,52,336.05
(A) = Closing Value of Last Year 9                             21,52,336.05 10%                   2,15,233.61             19,37,102.45
(A) = Closing Value of Last Year 10                             19,37,102.45 10%                   1,93,710.24             17,43,392.20
(A) = Closing Value of Last Year 11                             17,43,392.20 10%                   1,74,339.22             15,69,052.98
(A) = Closing Value of Last Year 12                             15,69,052.98 10%                   1,56,905.30             14,12,147.68
Salvage Value 12                               9,00,000.00

In diminishing value method, there is no use of salvage value while calculating depreciation.

jeff jeffy answered 1 year ago
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