3.1 - Depreciation Estimates Comparison
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Practice Questions
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What is depreciation?
💡 Hint: Think about how assets lose value.
What does salvage value mean?
💡 Hint: Consider what you would get after disposing of an asset.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary benefit of using the Double Declining Balance method?
💡 Hint: Consider which method gives more upfront financial benefit.
True or False: The Sum of the Years' Digits method ignores the salvage value in calculations.
💡 Hint: Think about how calculations are conventionally made.
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Challenge Problems
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A company purchases machinery worth ₹1,000,000 with a salvage value of ₹100,000 and a useful life of 10 years. Calculate the depreciation for the third year using both SYD and DDB methods.
💡 Hint: Calculate book values carefully for accurate DDB values.
Given a machine with an initial cost of ₹1,500,000 and a salvage value of ₹150,000, switching from DDB method to straight line after year 4 because it depreciated too fast, explain the impact on financial statements.
💡 Hint: Consider how switching methods affects overall asset valuation.
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