SAMPLE: Depreciation

Problems Answers
1. A car was bought on July 1, 2016 costs P650,000 with a salvage value of P50,000. It
has a Useful Life of 10 years. Using the Straight-line Method of Depreciation, by how
much does it depreciate each year by the end of 2016? How much will it depreciate
in July 2017?
Depreciation = (P650,000-P50,000)/10
= P600,000/10
= P60,000

P60,000 is the annual depreciation of the item. In months, that would be P60,000/12
P5,000 each month. Counting from July, it will be 6 months of depreciation
P5,000 x 6 = P30,000 for 2016 and P60,000 for 2017.

2. A machine cost a company P800,000 with a salvage value of P20,000. It’s useful life is
expected to end after producing 200,000 units. For one year, it was able to produce
24,500 units. By how much does its value depreciate?
Depreciation = (P800,000-P20,000)/200,000
= P780,000/200,000
= P3.90/unit

24,500 units x P3.90/unit = P95,550

3. A cellphone costs P45,000 with a salvage value of P5,000. It has a useful life of 5
years. Using the declining balance method, how much will it depreciate each year?
Depreciation = Book Value x 2 x Depreciation Rate
Dep. Rate = 100%/5
= 20%

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 Year Book Value Depreciation Amount

1 P45,000 P18,000

2 P27,000 P10,800

3 P16,200 P6,480

4 P9,720 P3,888

5 P5,832 P832

4. Chris bought a gaming computer worth P65,000. It has a useful life of 4 years. At the
end of its useful life it will have a salvage value of P9,000. Using the Sum of the Years
method in calculating depreciation, how much will it depreciate each year?

Year Years Left Depreciation Amt

1 4 P22,400

2 3 P16,800

3 2 P11,200

4 1 P5,600

SUM OF THE YEARS = 10

This document/presentation contains proprietary and confidential information. Reproduction, redistribution, or forwarding to any third party, in
whole or in part, is strictly prohibited unless made with prior written consent from AC Education Inc./iPeople, Inc. Violation or noncompliance
shall be dealt with according to law.