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-   -   Depreciation method (https://www.askmehelpdesk.com/showthread.php?t=171998)

  • Jan 13, 2008, 02:12 PM
    shahid14
    Depreciation method
    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
  • Jan 13, 2008, 02:24 PM
    N0help4u
    Ummm what is the thing you want to know about?
    Gold? A car?
  • Jan 13, 2008, 03:23 PM
    pready
    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%
  • Jan 14, 2008, 07:35 AM
    pready
    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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