Questions On Depreciation Of Fixed Asset

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