1.3. Depreciation Calculation for the Ninth Year

Try these first

1. 1.

   What is the formula for calculating depreciation using the Sum of the Years Digits method?

   Hint

   Remember to sum the total of years.

2. 2.

   Define salvage value in the context of asset depreciation.

   Hint

   Think of it as what you can sell the asset for after it is no longer useful.

3. 3.

   What is the formula for the Sum of the Years Digits method?

   • (n/N) * (Cost - Salvage)
   • (N/n) * (Cost - Tire)
   • n * Cost - Salvage

   Hint

   Focus on the relationship between the years and the overall life.

4. 4.

   True or False: The Double Declining Balance method factors in the salvage value of an asset.

   • True
   • False

   Hint

   Think about how different depreciation methods treat salvage value.

5. 5.

   Given a machine with a starting cost of ₹85,00,000 and a salvage value of ₹15,00,000. Using SYD, calculate the depreciation for the sixth year of its nine-year useful life.

   Hint

   Use the years remaining from the sixth year.

6. 6.

   A business uses the DDB method, and its accumulated book value has dropped below the expected salvage value at year three. Calculate how they can effectively switch to straight-line without losing value.

   Hint

   Track adjustments against the book value and salvage expectations.