Mayhay,Adrian Paul C

Student Number:17-21370

Straight Line Method

a. An asset is purchased for Php 500,000. The salvage value in 25 years is Php 100,000. What are

Given
Cₒ=500,000
n=25 years
Cm=100,000
m=firs 3years

Solution
Cₒ−Cn
d=
𝑛
500,000−100,000
d= = PHP16,000
25
depreciation in the first 3 years=16,0009(3)= PHP 48,00

2.An equipment which cost Php 200,000 has a useful life of 8 years. With a salvage value of Php 25,000
at the end of its useful life. Find the Depreciation at the fifth year and its book value.

Given

Cₒ=200,000

n=8 years

Cn=25,000

m=5ft year

Solution
Cₒ−Cn
A .d= B. Cm= Cₒ-Dm depreciation fifth year =21,875(5)
𝑛

200,000−25,000
d= =200,000-21,875(5) =PHP 109,375
8

=PHP21,875 = PHP90,625

3.Sinking Fund Method 3. A broadcasting corporation purchased an equipment for Php 53,000 and paid
Php 1,500 for freight and delivery charges to the job site. The equipment has a normal life of 10 years
with a trade-in value of Php 5,000. at i = 6% Find the annual depreciation cost.

Given
Cₒ=53,000+1500= 54,500
Cm=5000
i=6%
 n=10 years

Solution
(Cₒ−Cn)i (54,500−5000)0.06
d= (1+𝑖)𝑛−1 = (1+0.06)10 −1
d=PHP 3,755,46

4. An equipment was bought for Php 30,000 six years ago. It will have a salvage value of Php 3,000 four
years from now. It is sold now for Php 8,000. What is its sunk cost if the Depreciation method (i = 6%)
*Note: Sunk cost is a cost that has already been incurred and cannot be recovered.

Given

Cₒ=30,000 i=6% Book value Sunk cost=Book Value-resale Vale

Cn=3000 Cm= Cₒ-Dm =15711.5-8000

𝑑((1+𝑖)𝑚−1)
Sold now= 8000 D= 𝑖
=7712

2048.43((1+𝑖)6−1)
N=4 years D= 0.06

m=6 years D=PHP14288.45

Solution Cm=30,000-14288.45
(Cₒ−Cn)i (30,000−3000)06
d= (1+𝑖)𝑛 = (1+0.06)10 −1
Cm=15712
−1

d=Php 2048.43

Declining Balance Method

5. A radio service panel initially cost Php 56,000. Its resale value at the end of the 5th year of the useful
life estimated at Php 15,000. By means of the declining balance method, Determine the depreciation
charge at the 2nd year.

Given

Cₒ=56,000

N=fifth year

Cm=15,000

@2nd year?

Solution

𝑛 𝐶𝑛 5 15,000
K=1 − √ Cₒ =1 − √56,000 =0.23 d= CₒK(1 − 𝑘)𝑚−1 =56,000(0.23)(1 − 0.23)2−1 =PHP9917.6
6. An earth moving equipment that cost Php 90,000 will have an estimated salvage value of Php 18,000
at the end of 8 years. Compute for the book value and total depreciation at the end of 5th year.

Give
Cₒ=Php 90,000
Cn=18,000
N=8 years
m=fifth year
Solution
𝑛 𝐶𝑛 8 18,000
K=1 − √ ==1 − √ =0.18
Cₒ 90,000
d= CₒK(1 − 𝑘)𝑚−1 =90,000(0.18)(1 − 0.18)5−1 =PHp7324.37
Cm(1st try)= Cₒ(1 − 𝑘)𝑚
=PHP33,366.59

Sum of Year’s Method

7. The corporation purchased a machine for Php 1 million. Freight and installation charges amounted to
3% of the purchase price. If the machine shall be depreciated over a period of 8 years with a salvage
value of 12%. Determine the depreciation charged during the 5th year.

Cₒ=1,000,000+30,000=1030000

N=8 years

Cm=123600(12% SV)
𝑛(𝑛+1)
Years= 2

=36
8−4
d= 36 (1030000-123600)

d=100711.11

8. A company purchases an asset for Php 10,000 and plans to keep it for 20 years. If the salvage is zero
at the end of the 20th year, what is the depreciation in the third year
𝑛
Cₒ=10,000 years=2 (1 + 𝑛)
20
N=20 years = 2 (1 + 20)=210
20−2
Cm=0 d= 210 (10000-0)

D=? d=857.14