as asset cost of £80,000 has an estimated scarp value of £2048 and an estimated useful life of 4 years
ITS REDUCING BALANCE METHOD
WANT TO FIND RATE
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as asset cost of £80,000 has an estimated scarp value of £2048 and an estimated useful life of 4 years
ITS REDUCING BALANCE METHOD
WANT TO FIND RATE
Ummm what is the thing you want to know about?
Gold? A car?
If it is the Double Declining Balance method you are asking about then:
1/number of years, 1/4 = 25% X 2 =50%
For 1.5 times use 25% X 1.5 = 37.5%
Straight Line method is 1/# yr's of Depreciation. In other words 1/4 =25%
Double Declining Method is 2 times the straight line rate.
Another Example if the item is Depreciated over 5 years then the straight line rate is:
1/5 = 20%
double the straight line rate is 20% X 2 = 40%
Then you take the Remaining book value of the equipment X the Rate = Depreciation Expense.
In your example for year 1:
RBV (Remaining Book Value) 80,000 X 50% = 40,000 Depreciation Expense
Year 2
RBV 40,000 X 50% = 20,000 Depreciation Expense
Year 3
RBV 20,000 X 50% = 10,000 Depreciation Expense
year 4- Final Year
This is Different in that the Depreciation expense used will be the Expense needed to reach the Salvage Value
In other words the Depreciation Expense for year 4 will be 7,952
now you are at the Salvage Value of 2,048
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