Practice Exercise - Types of Deprecation 2 Strictly Confidential

Table of Contents

Different Types of Depreciation

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Calculating Different Forms of Depreciation

Calculate the three different types of depreciation below.

Straight Line

Purchase Price 35,000 Depreciation = (Cost - Salvage Value) / Useful Life of Asset
Scrap Value 2,725
Useful Life 5

Period Opening Balance Depreciation Expense Closing Balance

1 35,000 6,455 28,545
2 28,545 6,455 22,090
3 22,090 6,455 15,635
4 15,635 6,455 9,180
5 9,180 6,455 2,725

Double Declining Balance

Purchase Price 35,000 Depreciation = (100% / Useful Life of Asset) x 2 x Opening Balance Book Value
Scrap Value 2,725
Useful Life 5

Period Opening Balance Depreciation Expense Closing Balance

1 35,000 14,000 21,000
2 21,000 8,400 12,600
3 12,600 5,040 7,560
4 7,560 3,024 4,536
5 4,536 1,814 2,722

Units of Production

Purchase Price 35,000 Depreciation = (# of Units Produced / Lifetime # of Units) x (Cost - Salvage Value)
Scrap Value 2,725
Useful Life 5

Period Units % of Total Units Opening Balance Depreciation Expense Closing Balance
1 2,000 6% 35,000 1,844 33,156
2 3,500 10% 33,156 3,228 29,928
3 2,000 6% 29,928 1,844 28,084
4 11,500 33% 28,084 10,605 17,479
5 16,000 46% 17,479 14,754 2,725
35,000 100%

Practice Exercise - Types of Deprecation 2 Page 3 of 3