Urm.. an income statement has been drafted half-yearly 30/12/05 and depreciation on PPE is $125,000.. next there are transaction involved between 31/12/05 - 30/06/06.. where PPE depreciation for the year is at $500,000...

How do I calculate depreciation??

Is it $250,000? Since its 6 months? I'm confused! :confused:

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Originally Posted by tptpkeh

urm.. an income statement has been drafted half-yearly 30/12/05 and depreciation on PPE is $125,000 .. next there are transaction involved between 31/12/05 - 30/06/06.. where PPE depreciation for the year is at $500,000...

how do i calculate depreciation???

is it $250,000?? since its 6 mths?? im confused !!:confused:

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This depends on the depreciation employed by the organizations.
For example if the amount to be depreciated is $500,000 and the straight line method is used and the equipment has a useful life of 25 years it would be $500,000/25 or $20,000. There is also a double declining method a usage method etc... It depends on the industry. Another example would be $500,000 divided by the number of widgets manufactured during the period. If the equipment is estimated to have an ability to manufacture a million widgets in its lifetime you would divide the number of estimated lifetime widgets into the $500,000 to get a per unit value and multipy that number by the number of items produced during the period. Remember to calculate the year and break it down by the number of actual months. If the equimpment was in use for half year, do the math. I hope this helps

Quote:

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Originally Posted by viper 82

This depends on the depreciation employed by the organizations.
For example if the amount to be depreciated is $500,000 and the straight line method is used and the equipment has a useful life of 25 years it would be $500,000/25 or $20,000. There is also a double declining method a usage method etc... It depends on the industry. Another example would be $500,000 divided by the number of widgets manufactured during the period. If the equipment is estimated to have an ability to manufacture a million widgets in its lifetime you would divide the number of estimated lifetime widgets into the $500,000 to get a per unit value and multipy that number by the number of items produced during the period. Remember to calculate the year and break it down by the number of actual months. If the equimpment was in use for half year, do the math. I hope this helps

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urm thts the prob.. its not even stated in the ques.. all its asking is general journal entries for the yr ended 30 June 2006.. so does that mean I calculate depreciation within that 6 months period? Hence $500,000 x 1/2 = $250,000??

so my journal entries to record the depreciation transaction would b

30/06/06
DR Depreciation – Property, Plant and Equipment $250,000
CR Accumulated Depreciation – PPE $250,000
[Depreciation for Property, Plant and Equipment]

is this correct?