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# 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:

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 (d): Sum of Year Digit Method

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:

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

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

### Solution (c): Double Declining Balance Method

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:

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