Depreciation

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
I wonder if someone can help me?!<BR>I'm going over what we did in class on depreciation and I've got myself all confused!!<BR>The question we've been given is;<BR><BR>A company starts business on 01/01/2003, the financial year end being 31/12. You are to show;<BR><BR>a) The machinery account<BR>b) The provision for depreciation account<BR>c) The balance sheet extracts for each of the years 2003, 2004, 2005, 2006.<BR><BR>The machinery bought is:<BR><BR>2003 01/01 1 machine costing £8000<BR>2004 01/07 2 machines costing £500 eaxh<BR>2004 01/10 1 machine costing £6000<BR>2006 01/04 1 machine costing £2000<BR><BR>Depreciation is at the rate of 10% per annum using the straight line method, machines being depreciated for each proportion of a year.<BR><BR>The bit I am stuck on is how you work out the depreciation for the proportion of a year - help!?!?!<BR>I've got some notes about x by 1/2 for 6 months but I've got completely lost on this.<BR><BR>Many thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Depreciation

    In some question it will ask you to deprciate a full year regardless when the machine was brought, but if you have to pro rata the number of months remaining until year end, then work out what the annual charge would be eg £500x 10% = annual charge<BR>divide by 12 months then muiltply by the number of remaining months to year end.<BR><BR>Hope this helps<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Depreciation

    Hi,<BR><BR>COST x 6 months / 12 months x % = <BR><BR>Eg, 1000 x 6/12 x 10% = £50<BR><BR>You can make it into a fraction so COST x 1/2 x 10% = £50<BR><BR>Hope this helps

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