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Depreciation

Forums › FIA Forums › FA2 Maintaining Financial Records Forums › Depreciation

  • This topic has 2 replies, 2 voices, and was last updated 4 years ago by Ken Garrett.
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  • Author
    Posts
  • May 9, 2021 at 2:09 pm #620143
    khulan2002
    Member
    • Topics: 13
    • Replies: 6
    • ☆

    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?

    May 9, 2021 at 5:18 pm #620158
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    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

    May 9, 2021 at 5:21 pm #620159
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    On 1/1/2019 NBV = 30,720 – 6144 =24,576
    Profit/loss on disposal = Proceeds – NBV = 24,000 – 24,576
    So I make it a loss of 576

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