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asset cost residual value service life (years) depreciation method depreciation (year 2) a $21,000 5 ddb $21,000 b 42,000 8 sl 4,600 c 67,000 1,000 sl 6,000 d 232,000 11,000 10 22,100 e 201,000 21,000 8 ddb

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Rachita129idn

Cost of the asset = (21,000*100/40)*100/60 = 52,500 * 100/60=875000

Depreciation method: what is it?

  • Cost of the asset = (21,000*100/40)*100/60 = 52,500 * 100/60=875000
  • The straight line method of depreciation evenly distributes annual depreciation across the life of an asset. In other words, the depreciation rate each year is set.
  • The formula is as follows: SL; Depreciation expense=(Cost-Residual value)/ (lifetime of asset)
  • In the early years of the asset's life, higher values of depreciation are subtracted from the asset's value using the double declining balance technique of depreciation. The residual values are ignored.
  • The depreciation process that uses a straight line distributes annual depreciation across the course of an asset's life. In other words, the annual depreciation rate is predetermined.
  • The twofold falling balance method of depreciation is used to deduct larger values of depreciation from the asset's value in the early years of its life. We disregard the residual values.

To learn more about Depreciation method refer to:

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