Deferred Tax example 1

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September 30, 2017 at 9:37 pm #409100
bridget506
Member
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Hi Chris,
Please I am not clear with the carrying value amount calculation; how about the residual value of $30,000 is it not taken off from $150,000 cost before the depreciation figure? You started with:
150,000 – 30,000/6years. Then you continued with 150,000 – 20,000
October 4, 2017 at 9:01 pm #409475
P2-D2
Keymaster
- Topics: 4
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Hi,
The first calculation gives us the annual depreciation of 20,000. To then calculate the carrying value we deduct the depreciation from the cost of 150,000. The residual value is only used in calculating the depreciation, not the carrying value.
Thanks
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