chapter4-depreciation-examples

chapter4-depreciation-examples - Farm Management Chapter 4...

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Farm Management Chapter 4 Depreciation Examples
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farm management chapter 4 - examples 2 Straight Line Annual Depreciation = Cost – Salvage Value Useful Life Annual Depreciation = (Cost – Salvage Value) x R where R is found by dividing 100% by useful life Or
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farm management chapter 4 - examples 3 Declining Balance Annual Depreciation = Beginning Year Book Value x R R is a constant percentage rate. Its value depends on useful life and the type of declining balance chosen. It is a multiple of the straight line rate.
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farm management chapter 4 - examples 4 Examples Calculate depreciation for a machine with a cost of $10,000, a salvage value of $2,000, and a useful life of 10 years.
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farm management chapter 4 - examples 5 Using Straight Line Annual Depreciation = ($10,000 – $2,000) 10 = $800 Annual depreciation will be the same every year under this method.
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farm management chapter 4 - examples 6 Using Double Declining Balance Year 1: $10,000 x 20% = $2,000 Year 2: $ 8,000 x 20% = $1,600 Year 3: $ 6,400 x 20% = $1,280 20% = 2 x 100% 10 useful life
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farm management chapter 4 - examples 7
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