5. Conclusion

Try these first

1. 1.

   What is depreciation?

   Hint

   Think about why a machine loses value over time.

2. 2.

   What does SYD stand for?

   Hint

   It's a method of calculating depreciation.

3. 3.

   What does the DDB method focus on?

   • Future Salvage Value
   • Immediate Expenses
   • Total Cost

   Hint

   Think about which expenses are recorded earlier with this method.

4. 4.

   True or False: The SYD method calculates depreciation purely on historical cost.

   • True
   • False

   Hint

   Does it take years remaining into account?

5. 5.

   Calculate the first-year depreciation for an asset costing $50,000 with a salvage value of$5,000 and a useful life of 10 years using SYD.

   Hint

   First, figure out the sum of years from 1 to 10.

6. 6.

   Given a $20,000 asset and a salvage value of$2,000 with a DDB rate for 5 years, calculate the book value after 1 year.

   Hint

   Calculate depreciation using DDB formula first.