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    nznat's Avatar
    nznat Posts: 2, Reputation: 1
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    #1

    Oct 20, 2010, 07:31 PM
    Capita Expenditure straight line depreciation
    Please help :
    Capital Expenditure
    New Processor mashine worth 200000 is planned to be bought on HP at the start of September. Deposit of 80000 is required with the balance of 132000 being payable at 11000 per month for the following 12 months. The first payment will occur in September. The depresiation rate applying to this machine is 25% per annuam on a straight line basis.
    Stragling to calculate the depreciation.
    nznat's Avatar
    nznat Posts: 2, Reputation: 1
    New Member
    		  
    #2

    Oct 20, 2010, 07:41 PM

    Sorry just read the conditions, I'm not trying others to find the soluation for me. Im just a bit lost with calculating the depreciation.
    My previous calculations were.
    20000*25%=5000/12-416.67 and then I lost? I need to multiple on months but how many?
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #3

    Oct 21, 2010, 04:51 AM
    You're on the right track. Take care to keep track of the number of zeros, though... using commas can help.

    First, you're correct that the method or pattern of paying the total 200,000 cost doesn't affect the depreciation. At a straight-line, 25% depreciation rate, the depreciation will be 200,000 / 4 = 50,000 every 12 months from the moment of puchase, or equivalently, 50,000 / 12 = 4,167 every month beginning September 1.

    Thus, the total depreciation will be 4,167 per month, for 48 months, = 200,000 in total (adjusted for rounding). If this company is on a calendar-year basis, their depreciation for the first year will be 4,167 x 4 (Sep, Oct, Nov, Dec) = 16,668.
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