TUTORIAL 12

  

BUSINESS MATHEMATICS

 

                        MARCH 2003

 

 

BRING YOUR LECTURE 12 NOTES + SOLUTIONS TO CLASS EXERCISES FOR THIS TUTORIAL

 

Lecture 12: Refer to your notes and solutions to exercises in lecture 12 for this part.

Example 2a (last part)

 

How much of depreciation has been taken after 2 years? After 4 years?

 

How much more depreciation has been taken in the double declining method when compared with the straight line method after 2 years? After 4 years

 

Answer:

How much of depreciation has been taken after 2 years? After 4 years?

After 2 years: Depreciation taken = 37,000 - 11,520.47* = 25,479.53

After 4 years: Depreciation taken = 37,000 - 3587.06  * = 33,412.94

From solutions to exercises in lecture 12

 

 

How much more depreciation has been taken in the double declining method when compared with the straight line method after 2 years? After 4 years?

 

Straight line method:

Depreciation expense per year = (37000 – 2000 ) / 5 = 7,000**

Calculated in answer to the first part

 

After two years, additional depreciation taken for double declining method

= 25,479.53 – (7000 x 2) = 15,479.53

 

After four years, additional depreciation taken for double declining method

= 33,412.94 – (7000 x 4) = 5,412.94

 

1.)    Rolf Company acquires a machine costing RM288,000. After 6 years, this machine will be disposed for RM30,000. Find the depreciation expense and depreciated value of the machine using the straight line method.

2.)    A car repair shop obtains a new machine for a cost of RM125,800.  This machine is depreciated using the double declining method over the next 7 years. At the end of this time, the shop will trade-in the machine for a new one. The trade-in value is estimated to be RM12,000.

Calculate the depreciation expense and the depreciated value of the machine for the seven years.

 

3.)    Lucky Company buys furniture for $54,000. This car will be used for 4

years, after which it will be sold for $35,000. Find the depreciation expense and the depreciated value each year for the 4 years calculated with:

 

a.)    The straight line method

b.)    The double declining method

c.)    How much more depreciation has been taken in the double declining

method when compared with the straight line method after 2 years? After 4 years?

 

4.) A firm installs a computer system for RM68,000. The system will be used for 8 years, after which it will become worthless. Find the depreciation expense and the depreciated value each year for the first 4 years calculated with:

 

a.)    The straight line method

b.)    The double declining method

c.)    How much more depreciation has been taken in the double declining

       method when compared with the straight line method after 2 years?   

       After 4 years? Comment.

 

5.)    AB Enterprises obtains a car for $240,000. This car will be used for 5 years,

after which it will be sold for $40,000. Find the depreciation expense each year for the 5 years calculated with the double declining method.

How much of depreciation has been taken after 2 years? After 4 years?

 

6.)    The cost of a machine was depreciated over 12 years. Using the straight line

method. Depreciation expense for the first two years was RM36,000. The salvage value at the end of the 12 years was RM10,000.

Find the cost of the machine.

 

7.)    The cost of a car was depreciated to a salvage value of RM12,000 over 9 years, at a depreciation rate of 13%.

 

a.)    Find the book value of the car

b.)    Find the depreciation taken after 3 years.

 

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