DEPRECIATION CALCULATION HELP?

Depreciation has not yet been accounted for. Equipment and Fittings are depreciated at 20% per year using the straight line method and Vehicles are depreciated at 25% per year using the reducing balance method.

Equipment & Fittings a/c = 194,500
Vehicles a/c = 17,500

I keep getting a combined depreciation charge of 43,275 but I'm told this is incorrect.

20% of 194,500 = 38,900
25% of 17,500 = 4375

38,900 + 4375 = 43,275

Can anybody explain the correct answer?

Thanks in advance

Comments

  • Jules18
    Jules18 Registered, Tutor Posts: 102 Dedicated contributor ? ? ?
    Just checking - is there any residual value involved or any specific instructions such as depreciation is calculated on a monthly not annual basis?
  • AngelDust
    AngelDust Registered Posts: 30
    Sorry I forgot to include the accumulated depreciation! @mrme89 @Jules18

    Equip & Fittings accum dep is 38,900 and Vehicle accum depreciation is 7,656.

    So 17,500 - 7656 = 9844 x 25% = 2461 < depreciation charge for Vehicle.

    So the answer is 2461 + 38,900 = 41,361 < combined depreciation.

    Sorry for the confusion!
Privacy Policy