Need help on a depreciation question please
topcat
Registered Posts: 452
Untitled by
For this i get
£350,000  £140,000 / 7 = £30,000 deprecation per year
Jan x2  Jan x6 = 4 * £30,000 = £120,000
Therefore (£350,000  £140,000  £120,000) = £90, 000 this should be the deprecation in the last year?
Four years have already been used and this was reassessed to 5 years meaning there if only one year remaining?
But the answer is £18,000 (£90,000 / 5 ) but this would mean the item has a total life of 8 years ...
Is my trail of thought wrong here is £18,000 correct and if yes how please?
Thank you
0
Comments

£18,000 is correct yes.
You start off right, you've calculated the depreciation right and have shown that up to the point of revaluation, £120,000 has been depreciated. This is where you start to veer off the track. At this point, the book value is £230,000 (350,000120,000) and the residual value is still £140,000 but the new remaining useful life is 5 years. You now start the calculation from scratch again. You need to depreciate £90,000 (230,000140,000) over 5 years, so 90000/5 = £18,000.
The new remaining life is from the point of revaluation NOT the original date.0 
Thank you :) I was over thinking it0
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