1 Note This method is only applicable when the salvage value is not zero 1 2

1 note this method is only applicable when the

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𝑟 = ? 𝑟−1 ? 𝑟 Note: This method is only applicable when the salvage value is not zero. ? 𝑟 ? 𝑛 = 𝐹? − 𝑆𝑉 𝑆𝑉 ?𝑉 𝑟 𝐹? 0 ? ? ??. ?? 𝑦?? ?????? ? 1 ? 2 ? 3
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College of Engineering Education 2 nd Floor, B&E Building Matina Campus, Davao City Telefax: (082) 296-1084 Phone No.: (082)300-5456/300-0647 Local 133 Page 10 of 26 6. DOUBLE DECLINING BALANCE METHOD (DDBM) ?𝑉 𝑟 = Book value at the end of “r” periods, appraisal value SV = Salvage value, scrap value, junk value, resale value FC = First cost ? 𝑟 = depreciation charge during the r th year ? 𝑛 = total depreciation n = Useful life, economic life of the property 7. SINKING FUND METHOD ? 𝑛 = ? ( (1 + 𝑖) 𝑛 − 1 𝑖 ) SUPPLEMENTARY PROBLEMS : Example 1.1 A Xerox machine costing 75,000 with salvage value of 10,000 at the end of its life can print 3,000,000 sheets in its entire life. If it has already printed 500,000 sheets, determine the total depreciation of the Xerox machine at that time. Formula: ?𝑉 1 = 1 − 2 ? (𝐹?) ?𝑉 𝑟 = 1 − 2 ? 𝑟 (𝐹?) ? 𝑟 = ? 𝑟−1 ? 𝑟 ? 𝑟 ? 𝑛 = 𝐹? − 𝑆𝑉 𝑆𝑉 ?𝑉 𝑟 𝐹? 0 ? ? ??. ?? 𝑦?? ?????? ? 1 ? 2 ?𝑉 1 = 1 − 2 ? (𝐹?)
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College of Engineering Education 2 nd Floor, B&E Building Matina Campus, Davao City Telefax: (082) 296-1084 Phone No.: (082)300-5456/300-0647 Local 133 Page 11 of 26 Example 1.2 A machine costing 3,000,000 has a salvage value of 0.1M at the end of its useful life, 20 years. It can be used for 5,000 hours in its entire life. Find the accumulated depreciation after using it for 1,000 hours. Example 1.4 A contractor imported a bulldozer for his manufacturer paying P250 000. Freight and insurance amounted to P18 000, broker’s fees and arrester services, P8500. Taxes, permits and others is P25000. If the contractor estimates the life of the bulldozer to be 10 years with a salvage value of P20 000, determine the book value at the end of 6 years using sinking fund method.
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College of Engineering Education 2 nd Floor, B&E Building Matina Campus, Davao City Telefax: (082) 296-1084 Phone No.: (082)300-5456/300-0647 Local 133 Page 12 of 26 Conventional Solution: Using sinking fund method, ? 𝑛 = ? ( (1 + 𝑖) 𝑛 − 1 𝑖 ) 301500 − 20000 = ? ( (1 + 8%) 10 − 1 8% ) ? = 19431.80107 → ? ? 6 = ? ( (1 + 8%) 6 − 1 8% ) = ? ( (1 + 8%) 6 − 1 8% ) → ? BV 6 = FC D 6 = 301500 B = 158949.6863 (answer)
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