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Declining Balance Method, Exercises of Economics

Economics

PROBLEM: The cost of an old ammo reloading press is ₱3000, its life is 6 years and its scrap value is ₱500. Find the annual rate of depreciation under a declining balance method (also known as the constant percentage method) and construct a depreciation table.

Typology: Exercises

2017/2018

Uploaded on 01/03/2023

MankeDG
MankeDG 🇵🇭

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bg1
The cost of a certain asset is
P3000, its life is 6
years and scrap value is P500. Find
the annual rate
of depreciation under a constant
percentage method
and construct a depreciation
table.
The cost of a certain asset is
P3000, its life is 6
years and scrap value is P500. Find
the annual rate
of depreciation under a constant
percentage method
and construct a depreciation
table.
pf3

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The cost of a certain asset is

P3000, its life is 6

years and scrap value is P500. Find

the annual rate

of depreciation under a constant

percentage method

and construct a depreciation

table.

The cost of a certain asset is

P3000, its life is 6

years and scrap value is P500. Find

the annual rate

of depreciation under a constant

percentage method

and construct a depreciation

table.

The cost of a certain asset is

P3000, its life is 6

years and scrap value is P500. Find

the annual rate

of depreciation under a constant

percentage method

and construct a depreciation

table.

PROBLEM: The cost of an old ammo reloading press is ₱3000, its life is 6 years and scrap value is ₱500. Find the annual rate of depreciation under a declining balance method (also known as constant percentage method) and construct a depreciation table. Given:  (^) B = ₱ 3000 , (^) S = ₱ 500 , (^) n = 6 years Solution:Declining balance method: k = 1 − n '

√(^

S

B )

'

√(^

→ k =0.  Depreciation @nth year: Dn = B^ (^ k^ )  Book Value: BV^ = B − Dn In year 1: In year 2: D 1 = 3000 ( 0.25816 ) → 774.48 D 2 =2225.52 ( 0.25816) → 574. BV (^) 1 = 3000 −774.48 → 2225.52 BV (^) 2 =2225.52−574.54 → 1650. In year 3: In year 4: D 3 =1650.98 ( 0.25816 ) → 426.22 D 4 =1224.76 ( 0.25816) → 316.