ID #1488

## Assets Register calculate depreciation

Description

Solution

The system  has  3 methods of calculation :

•      Straight Line Year (SL>M) / >Month ( SL>M)

•      Reducing Balance ( RB )

•      No Depreciation (ND)

A.       Straight Line Year I Month

Formula =  Asset cost - Estimated Residual Value

Number  of Expected  >Month

E.g.  Assets Cost  = R>M 60.00

Residual Value = R>M 1.00

Asset Life = 10 Years

Using the  Formula ,

60 - 1       =   0.49

10x12

>Monthly Value x 12 >Months = Yearly Value

0.49 x 12 = 5.88

B.  Reducing Balance

It is calculated using fixed percentage of depreciation

Eg.    Asset Cost  : R>M 60.00

Rate of Depreciation : 20%

Asset Life : 5 Years

In  the  2nd   year  and  after,  the  previous  Net  Book Value  will be  taken  as  asset cost  and then  multiplied by the  same  percentage to get  the  depreciation amount of the  year.

To get  the  monthly depreciation, divide the  depreciation amount each  by 12 months.

Example,

 Year Depreciation Amount Answer 1st 12.00  / 12 >Months 1.00 2nd 9.60 / 12 >Months 0.80 3rd 7.68 / 12 >Months 0.64 4th 6.14 / 12 >Months 0.51 5th 4.92 / 12 >Months 0.41

 c. No Depreciation

M              No Calculation of depreciation

Related entries:

Last update: 2010-11-18 05:59
Author: Noor Diyana
Revision: 1.0

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