Depreciation per hour = (FC - SV) / Total number of hours Depreciation per hour = ( 400, 000 - 20, 000) / 38000 Depreciation per hour = Php 10ī. What is the depreciation at the end of the second year?Ī. The expected flow of the machine is 38000 hours in six years. In the second year, 6000 hours and 8000 hours on the third year. Depreciation per hour = (FC - SV) / Total number of hoursĪ machine costs Php 400,000 with a salvage value of Php 200,000.The formula for Working Hours Method of Depreciation is:
Working Hours Method also called as Service Output Method is a depreciation method that results in the cost basis allocated equally over the expected number of units produced during the period of tangible properties. Total depreciation after x years = A / i Total depreciation = ( 18966.98956) / 0.06 Total depreciation = Php 132, 300.7939 5. Solve for the depreciation in the 6th year. The formulas for Sinking Fund Method of Depreciation are:Ī. Sinking Fund Method is a depreciation method wherein funds will accumulate for replacement purposes. Compute the machine's economic life in years. Solve for the total depreciation after two years. BV = FC - Total depreciation 800, 000 = 2, 000, 000 - Total depreciation Total depreciation = Php 1, 200, 000ī. Solve for the total depreciation of the machine. What is the machine's economic life in years?Ī. Using the Sum of the Years Digit Method, the book value at the end of two years is Php 800,000. It has a salvage value of Php 500,000 at the end of its economic life. Book Value = FC - Total depreciation Book Value = 1, 500, 000 - 800, 000 Book Value = Php 700, 000 Problem 2: Sum of the Years Digit MethodĪ machine costs Php 2,000,000. Solve for the book value in the third year. Solve for the total depreciation up to the third year. Sum of years = (n / 2) (n + 1) Sum of years = ( 5 / 2) ( 5 + 1) Sum of years = 15 yearsī. Using Sum of the Years Digit Method of Depreciation, what will be its book value for the third year?Ī. At the end of its economic life of five years, its salvage value is Php 500,000. John Ray Cuevas Problem 1: Sum of the Years Digit MethodĪn equipment costs Php 1,500,000. The formulas for Declining Balance Method of Depreciation are:
The assumption in this depreciation method is that the annual cost of depreciation is the fixed percentage (1 - K) of the Book Value (BV) at the beginning of the year. Depreciation by Declining Balance Methodĭeclining Balance Method is sometimes called the Constant-Percentage Method or the Matheson formula. Total depreciation = 250, 000 ( 3) Total depreciation = Php 750, 000 2. Solve for the total depreciation after three years. Determine the total depreciation after three years using the Straight Line Method of Depreciation.Īnnual depreciation = (FC - SV) / n Annual depreciation = ( 1, 800, 000 - 300, 000) / 6 Annual depreciation = Php 250, 000ī. The first cost of a machine is Php 1,800,000 with a salvage value of Php 300,000 at the end of its six years of life. Total depreciation = Annual depreciation (n) 71 = 2 (n) n = 35.5 years Problem 2: Straight Line Method Total depreciation = FC - BV Total depreciation = 101 - 30 Total depreciation = 71 millionĬ. Solve for the total depreciation after n years. Annual depreciation = (FC - SV) / n 2 = (FC - 1) / 50 FC = Php 101 millionī.
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