Depreciation Schedule
this section aims
to:
1. relate the
total and average years in depreciation in the preparation of depreciation
schedule; and
2. construct the
depreciation schedule.
Depreciation is
the lost in value of physical assets through its use. The yearly
deposits into the depreciation fund are called depreciation charges.
The depreciation
fund is the portions of a
given amount at the end of its useful life or the difference between the
original cost of the asset and the sum in the depreciation fund is called the book value of the asset. At the end of the year.
The gradual reduction of an asset's value. It is an expense, but because it is non-cash, it is often effectively a tax write-off; that is, a person or company usually may reduce his/her/its taxable income by the amount of the depreciation on the asset. Because there are many different ways to account depreciation, it often bears only a rough resemblance to the asset's useful life. This may further benefit the company as they may continue to use the asset tax-free after its value has technically depreciated to nothing.
Here's a simple eample i got from the internet.
Sample problem from: http://www.assetaide.com/depreciation/calculation.html
Checked by Prof. Crisencio Paner
Here's a simple eample i got from the internet.
Example: A copy machine is purchased for $3,217.89. The expected life is 4 years. Using double declining balance the depreciation would be calculated as follows:
factor = 2 * (1/4) = 0.50
factor = 2 * (1/4) = 0.50
| Year | Depreciable Basis | Depreciation Calculation | Depreciation Expense | Accumulated Depreciation |
|---|---|---|---|---|
| 1 | 3,217.89 | 3,217.89 * 0.5 | 1,608.95 | 1,608.94 |
| 2 | 1,608.94 | 1,608.94 * 0.5 | 804.47 | 2,413.41 |
| 3 | 804.48 | 804.48 * 0.5 | 402.24 | 2,815.65 |
| 4 | 402.24 | 402.24 * 0.5 | 201.12 | 3,016.77 |
Checked by Prof. Crisencio Paner
