Question

QUESTION 5

     

Cameron Industries Ltd purchased a new photocopier on 1 July 2010 at a cost of $16,500. The machine has an estimated residual value of $1,500 and an estimated useful life of 5 years or 30,000 copies.

Expected production for each year is 5,000, 4,000, 8,000, 7,000 and 6,000 copies respectively.

The Reducing Balance rate is 35%.

Required:

(a)     Complete the following table for the five years of the machine’s life for each of the depreciation methods indicated.          

You are required to round your calculations to the nearest whole dollar.

Year Ended	Straight Line	Units of Use	Reducing Balance
	Depreciation	Depreciation	Depreciation	Book Value
30/6/11
30/6/12
30/6/13
30/6/14
30/6/15
TOTAL

SPACE FOR WORKINGS (IF NEEDED):

(Total marks for Question 5 = 8 marks)

Answer 1

Amount $ Year Ended Straight Line Units of Use Reducing Balance Depreciation Depreciation Depreciation Book Value 30-06-11 3000 2500 5775 10725 30-06-12 3000 2000 3754 6971 30-06-13 3000 4000 2440 4531 30-06-14 3000 3500 1586 2945 30-06-15 3000 3000 1031 1914 Total 15000 15000

Workings

Amount $ Workings I Straight Line Method Formula (Total Value - Residual Value ) / Estimated Usefull Life = (16500 - 1500 ) / 5 = 3000 Opening Value 16500 Year Ended Straight Line Depreciation 30-06-11 3000 13500 30-06-12 3000 10500 30-06-13 3000 7500 30-06-14 3000 4500 30-06-15 3000 1500 Balance Value at the end of the 5 years $1500/- II Units of Use Total Units Produced = 5000+4000+8000+7000+6000 30000 Formula {Number of Units Produced × (Cost ? Salvage Value) }/Life in Number of Units e.g 1 year = {5000*15000}/30000 2500 Opening Value 16500 Year Ended Units of Use Depreciation 30-06-11 2500 14000 30-06-12 2000 12000 30-06-13 4000 8000 30-06-14 3500 4500 30-06-15 3000 1500 Balance Value at the end of the 5 years $1500/- III Reducing Balance Method Opening Value 16500 Year Ended Opening Value Depreciation @ 35% WDV 30-06-11 16500 5775 10725 30-06-12 10725 3754 6971 30-06-13 6971 2440 4531 30-06-14 4531 1586 2945 30-06-15 2945 1031 1914 Balance Value at the end of the 5 years $1914/-