# Questions On Depreciation Of Fixed Asset

September 6th, 2008 Comments off

Some questions for readers to practise on topic on depreciation of fixed assets based on straight-line basis and reducing or diminishing balance method:-

 FINANCIAL MATHEMATICS QUESTIONS ON DEPRECIATION 1 A firm bought a machine for \$20,000 which is expected to be used for 5 years and then sold for \$2,000. What is the annual amount of depreciation if the straight line method is used? 2 A machine costing \$10,000 has an expected life of 4 year and estimated residual value of \$500. Calculate the depreciation charge per year 3 A machine cost \$25,650 depreciates to a scrap value of \$500 in 10 years. Calculate: (a) the annual rate of depreciation if the reducing balance method of depreciation is to be used (b) the book value at the end of the sixth year 4 A firm estimates that office equipment depreciates in value by 40% in its first year of use, by 25% of its value at the beginning of that year during its second year of use, and thereafter each year 10% of its value at the beginning of that year Calculate: (a)      the value after eight years’ of equipment costing \$550 new (b)     the value when new of equipment valued at \$100 after five years’ of use. 5 The total cost of a fleet of lorries is \$180,00 and the residual value after five years is \$20,00. Using the diminishing balance method find the rate of annual depreciation. 6 Five word processors are brought for an office, the total cost of the equipment being \$12,000. The residual value of the machine after five years is estimated to be \$3,000. Find the annual percentage depreciation to be charged if (a)  the fixed installment method is used (b)  the diminishing balance method is used ( answer to 2 decimal plac  