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Depreciation calculation on change of usage life or change in rate

Hharidasp14y ago
Dear Sir,
i would like to know how to pass the entries for this.

I purchased $1000 worth furniture. the rate of depreciation is 20%. Actually i completed 3 years depreciation according to the rate of 20%. Now from 4th year onwards i like to change to depreciation rate from 20% to 10%. How can i pass the entries for new depreciation and adjustment of old depreciation.

I am very much thankful to you for your valuable advise.

Regards

Haridas Pandarathil
Email: [email protected]
MikeLittleMikeLittleTutor14y ago#1
Don't adjust for the previous 3 years. From year 4, depreciate at the rate of 10%

However, if you mean that the three-year old asset now has a revised estimated useful life of 10 MORE years, depreciate at the rate of (100-60)/10 = 4 per annum.

If you mean that your original estimate of a 5 year life should have been a 10 year estimate, depreciate (100-60)/ 7 = 5.714 each year for the next / remaining 7 years of its life
Cchrismunoda14y ago#2
Sir what should we do to installation costs paid to 1)specialists 2)own labourers what should be capitalised
MikeLittleMikeLittleTutor14y ago#3
Capitalise both specialist's costs as well as own labour costs incurred in installing new machinery
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