BBK Company bought an equipment to manufacture machine parts for Rs 5,600,000. The equipment was expected...

BBK Company bought an equipment to manufacture machine parts for Rs 5,600,000. The equipment was expected to be useful for 5 years and an estimated residual value of Rs

280,000. The equipment is expected to manufacture 350,000 parts. It manufactured 105,000 parts in year 1; 84,000 in year 2; 21,000 in year 3; 112,000 in year 4 and 28,000 parts in year 5.

Required:

Compute the depreciation expense for each year under the following methods:
(a) Straight-line;(b)Written-down-value;(c)Productionunits

Solutions

Expert Solution

Ans. A	Straight line depreciation = (Cost of asset - Residual value) / Useful life in years
		($5,600,000 - $280,000) / 5
		$5,320,000 / 5
		$1,064,000

	*In Straight line method the depreciation is equal in each year.

	Year	Depreciation
	1	$1,064,000
	2	$1,064,000
	3	$1,064,000
	4	$1,064,000
	5	$1,064,000

ekkarill92 answered 1 year ago

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