Question

Problem 2. [05 Marks] Ali & Sons, Inc., purchased a new machine on Sept 1, 2020 at a cost of Rs.180,000. The machine’s estimated useful life at the time of the purchase was five years, and its residual value was Rs.10,000. Required: Prepare a complete depreciation schedule, beginning with calendar year 2020, under each of the methods listed below (assuming half-year convention): 1. 200 percent declining-balance. 2. 150% declining-balance, switching to straight-line when that maximizes the expense

Answer 1

$$\frac{180000-10000}{5}=34000$$

1. For 2020

$$\frac{4}{12}\times34000\times2=22667$$

For 2021

$$\frac {180000-10000-22667}{5}\times 2=66933$$

for 2022

$$\frac{147333-66933}{5}\times2=32160$$

for 2023

$$\frac{80400-32160}{5}\times2=19296$$

for 2024

$$\frac{48240-19296}{5}\times2=11585$$

for 2025

$$\frac{28944-11585}{5}\times2=6944$$

2.

for 2020

$$170000-\frac{4}{12}\times0.15\times180000=161000$$

for 2021

$$161000\times(1-0.15)=136850$$

for 2022

$$136850\times(1-0.15)=116323$$

for 2023

$$116323\times(1-0.15)=98874$$

for 2024

$$98874\times(1-0.15)=84043$$

for 2025

$$84043\times(1-0.15)=71437$$