Depreciation

Are you sure you are remembering the question correctly, because it makes no sense to depreciate 25% straight line in the year of acquisition and the year of disposal - that just would not happen :-)

Yes, I remember correct because it was one of the questions that still haunting me after the exam. :) And I don't remember to practice something like that in exam kit. I simply didn't know how to solve it. Kind regards, camelia

My mistake. You are right. It was not specified that depreciation of 25 % straight forward. Only the usefull years and the residual value. But I still blocked and I didn't know how to solve it on the moment. Thank you, camelia

At first the annual depreciation will have been (50,000 - 1,000) / 7 = 7,000. So, the depreciation in year ended 31.12.X5 will be 9/12 x 7,000 = 5,250 In X6 it will be 7,000 in X7 it will be 7,000 In X8, up to 30.9.X8 it will be 9/12 x 7,000 = 5,250 At 30.9.X8 it is revalued at 41,000. They have owned it for 3.5 years, and therefore the remaining life will be 7 - 3.5 = 3.5 years. So the annual depreciation from then on will be (41,000 - 1,000) / 3.5 = 11,429 So the depreciation for the part of X8 since the revaluation will be 3/12 x 11,429 = 2,857 So the total depreciation for X8 will be 5250 + 2857 = 8107 (You had better check my arithmetic - I have just got back from a few days vacation and it is very late :-) )

Thank you so much for the answer. :)

You are welcome :-)