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On 1 January 2015, a business purchased an equipment costing $60,000. tThe equipment has an estimated life of 10 years.
1. Calculate depreciation charge for the year ended December 2018 using reducing balance method at 20% per annum.
answer: 6144?2. If the business disposed the equipment on 1 January 2019, and sale proceeds $24,000, what is the profit or loss on disposal of the equipment?
answer:12,000?2015 Depn charge = 60,000/5 = 12000. NBV = 60,000 – 12000 = 48,000
2016 Depn charge = 48,000/5 = 9600. NBV = 48,000 – 9600 = 38,400
2017 Depn charge = 38,400/5 = 7680. NBV = 38,400 – 7680 = 30,720
2018 Depn charge = 30,720/5 = 6144
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