Depreciation Problems and Solutions

 

Problem # 1:

Noor Bakhat & Company purchased a factory machine of Rs. 51,000 on January 1, 2015. The machine is expected to have a salvage value of Rs. 6,000 at the end of its 5 year useful life. During the useful life, the machine is expected to be used for 5,000 hours. The machine was used as under:

depreciation questions for practice

Required: Prepare Schedule of Depreciation on the basis of following methods

  • Straight Line Method
  • Units of Output Method
  • Double Declining Balance Method
  • Sum of Year Digit Method



Solution (a): Straight Line Method

straight line depreciation

 

Solution (b): Units of Output Method

unit of output method formula

units of production method calculator

 

Solution (c): Double Declining Balance Method

double declining balance formula

 double declining balance formula example



Solution (d): Sum of Year Digit Method

sum of the years digits method formula

sum of the years digits method depreciation

 

For more detail of Depreciation

Problem # 2: 

A small delivery truck purchased by Sheikh Sadan Mazhar on January 1, 2014:

Cost                                         $ 13,000

Expected salvage value            $ 1,000

Estimated useful life ( years)     5

Estimated useful life ( miles)     100,000

 Miles expected used are:

depreciation questions for practice with solutions

Required: Prepare Schedule of Depreciation on the basis of following methods

  • Straight Line Method
  • Units of Output Method
  • Double Declining Balance Method

 

Solution (a): Straight Line Method

straight line depreciation method equation

depreciation straight line method questions and answers

 

Solution (b): Units of Output Method

 units of production depreciation

units of production depreciation practice problems

 

Solution (c): Double Declining Balance Method

double declining balance method of depreciation

 double declining balance method of depreciation formula

 

Practice Depreciation MCQs 

Problem # 3: 

Hafiz Ullah & Company purchased a factory machine of Rs. 180,000 on January 1, 2012. The machine is expected to have a salvage value of Rs. 20,000 at the end of its 4 year useful life. During the useful life, the machine is expected to be used for 160,000 hours. The machine was used as under:

depreciation questions for practice class 11

Required: Prepare Schedule of Depreciation on the basis of following methods

  • Straight Line Method
  • Units of Output Method
  • Diminishing Balance Method
  • Sum of Year Digit Method

 

Solution (a): Straight Line Method

straight line depreciation method book value

straight-line depreciation worksheet

 

Solution (b): Units of Output Method

units of production depreciation example

prepare a depreciation schedule using the units-of-production method

 

Solution (c):Diminishing Balance Method

double declining balance method of depreciation example

how to calculate declining balance depreciation in excel

 

Solution (d): Sum of Year Digit Method

sum of the years digits method of depreciation example

sum of the years digits vs double declining balance

 

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