Depreciation Methods
Depreciation tracks the loss in value of an asset over time. Common methods include straight-line, sum-of-years digits, declining balance, MACRS, and sinking fund.
$$D_{SL}=\frac{FC-SV}{n}$$
Depreciation tracks the loss in value of an asset over time. Common methods include straight-line, sum-of-years digits, declining balance, MACRS, and sinking fund.
A truck loader costs $50,000, salvage value $5,000, and life 5 years. Find annual depreciation and book value at the end of year 3 using straight-line depreciation.
Final answer: annual depreciation $9,000; book value $23,000.
A truck loader costs $50,000, salvage $5,000, and life 5 years. Find total depreciation and book value at the end of its life using sum-of-years digits.
Total depreciation over the life is $45,000, so book value is the salvage value.
Final answer: total depreciation $45,000; book value $5,000.
A machine costs P200,000 with salvage P15,000 at the end of 8 years. Find book value after 6 years using sinking fund depreciation at 6%.
Final answer: P69,619.86.