Scribd Logo
Загрузить

Добро пожаловать в Scribd!

  • Engineering Economics

    Загружено:

    Irma Ahkdir
    4K просмотров10 страниц
    Lesson about Depreciation

    Авторское право

    © © All Rights Reserved

    Доступные форматы

    PDF или читайте онлайн в Scribd

    Этот документ был вам полезен?

    Это неприемлемый материал?

    Пожаловаться на этот документ
    Lesson about Depreciation

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PDF или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    4K просмотров10 страниц

    Engineering Economics

    Загружено:

    Irma Ahkdir
    Lesson about Depreciation

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PDF или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 10
    102 PART 1 ~ Engineering Economics - Depreciation Is the decrease in value of property due fo the passage of ime. Depreciation is an artificial expense that spreads the purchase price of an asset ‘other property over a number of years. Depletion — is another artical deductible operating expense designed to ‘compensate mining organizations for decreasing mineral reserves. Methods of Computing depreciation: 1. Straight line depreciation With the straight line method, depreciation is the same each year. The depreci basis (FC — SV) is allocated uniformly to all ofthe n years in the depreciation p Note also that depreciation in this method is uniform annually Book value ~ is the difference between original purchase price and accumu depreciation. FORMULAS: ‘A. D = annual depreciation= Fe = SV B. Dp = total depreciation after m years = AD ©. BVm = book value after m years = FOEDy ©. Depreciation rate = D. sv E. Salvage Rate = SY Fe F. Sunk Cost = Book Value - Actual Resale value Where: FC = first cost SV= salvage value 11 = life ofthe property or equipment 2. Sinking Fund method ‘A.D = annual depreciation = C= SWI ait C. BV FOEDy PART 1 - Engineering Economics - Depreciation 103 Bunk Cost = BV = Actual resale Value Declining Balance Method FC ‘Annual depreciation Depreciation fr the frst 5 years: Di = k(FOMt—K) Da = K(FC)(1-h)} Ds = K(FC)(1—k) Bes RAraN a k = constant ratio Ds = k(FC)1 — Kt wefore, annual depreciation for any year is Da = KEN =) Total depreciation after § years, Drs Dre = Di +D; #0: +Ds+Ds | Bim = Book value after 5 years = FORD Is BV = book value after m years = FC (1 = |, Sum of the Years Digit Method (SOYD) for 8 years (n = 8) BOYD = 14+24+3+4+5+6+7+8=36 Using ne oma: $0¥B = (42%) n 'A. Depreciation forthe fist 5 years: Dy = (FC- SV) (136) D, = (FC- SV) (736) Ds = (FC- SV) (636) De = (FC. SV) (536) De = (FC SV) (4/36) B. Drs = total depreciation after 5 years Drs = Dy #02+Di# Ds+Ds Shortcut method B+ 7464544 Drs = (FC sul a | ©. BVs = book value after 5 years BVs = FO=Dis PART 1 - Engineering Economics - Depreciation 105 104 PART 1 - Engineering Economics - Depreciation 5. Double Declining Balance Method Double declining balance depreciation is independent of salvage vi Furthermore, the book value never stops decreasing, although the depreci decreases in magnitude, Double deciining balance method is also known as reentage on diminishing balance method IEPRECIATION PROBLEMS JONOMICS - 1 (ME Bd. Apr. 98) ‘asset is purchased for P9,000. Its estimated ife is 10 years, after which it will be for P1,000.00. Find the book value during the third year if the sum-of i (SOYD) doprociation ie ueod. A ‘A. P6,100.00 ©. 5,072.00 B. P4/500.00 D.P4,800.00 B. Depreciation for the first § years: LUTION: Dy FOU, Da = (FC-Dit SOYD = 14243+4+5+6+7+8+9410 Ds = (FC-Dar SOYD = 55 De = (FC-D3)e Ds = (FC-Dayr Dep; = (9000 - 1000 10/55) = P1,454.54 eps = (9000 - 1000)(9/55) = P1,309.10 eps = (8000 - 1000\8/55) = P1.163.63, ° Drs = total depreciation after 5 years Ds = Dy +0: + 0) +D4+Ds Depr= 1,454.54 + 1,309.10 + 1,163.63 Depr = P3,972.28 Book Value = FC - Depr Book Value = 9000 - 3,972.28 = P5,072.72 D. Bm BIFC(IE A” 6. Constant Percentage method The constant percentage method is similar to the straight line method, in that depreciation is the same each year. Ifthe fraction of the basis used as depreciati is In, there Is no difference between the constant percentage and straight i method. With the straight line method, the life is known. With the const SONOMICS - 2 (ME Bd. Apr. 98) asset is purchased for P500,000. The salvage value in 25 years is P100,000. iat are the depreciation inthe first three years using straight line method? percentage method, the depreciation fraction is known ‘A. 48,000.00, C. 32,000.00, R. P2a.ano on 1 PrB.on an D = annual depreciation LUTION: D = (depreciation fraction) x(FC= SV) D = (tinyFo~ — “The depreciation for the first 3 years are: FC - Sv D- 500,000 ~ 100,000 Ey Note: D isthe depreciation every years until 25 years: = P16,000 ECONOMICS - 3 (ME Bd. Apr. 98) ‘A machine has an initial cost of P50,000 and a salvage value of P10,000 after 10 years. Whats the book value after five years using straight line depreciation? ‘A. P35,000.00 . P15,500.00 B. 25,000.00 D. 30,000.00 SOLUTION: o- Fo=8¥ 106 PART 1 - Engineering Economics - Depreciation PART 1 - Engineering Economics - Depreciation 107 BV, =FC-Dep: BV, = 9000 - 1454.54 = 7,545.00 Solving forthe book value after § years: }ONOMICS - 6 (ME Bd. Oct. 97) oe a aoe 514,000) factory equipment has an initial cost of P200,000.00. Its salvage value after 10 Byes. 000 0 Ys 1s P20,00000." As percentage ofthe inal cost, what i the staight tne preciation rate of the equipment? c. 8% ECONOMICS - 4 (ME Bd. Apr. 98) a cnr ‘company puenass an ass fer P10,000 and plant keep for 20 years ution: Salvage value is zero at the end of the 20th year, what is the depreciation in year? Use sum-of-the-years-digit depreciation. ‘A. P1,000.00 ‘©, 937.00 De B. P857.00 D. P747.00 SOLUTION: = 200000 — 20000 = 18,000 _ Depreciation Kate = Like sovo -( Depreciation Rate = 18 000200000 an Depreciation Rate sovp= 241+ 20) = 210 18 Sort 18 = 28 (10.000 - 0) Deps= 5 ( ) |CONOMICS - 7 (ME Bd. Apr. 97) Nn asset is purchased for P9,000.00. ts estimated life is 10 years, after which it will sold for P1,000.00. Find the book value during the second year ifthe sum-of:he- rs digit depreciation is used. Dep, 5 Fe -sv) ‘A. P5,800.00 . P6,600.00 pee oy B. 5,500.00 D. P6.236.00 JOLUTION: ECONOMICS - 5 (ME Bd. Apr. 98) [An asset is purchased for P9000. Its estimated life is 10 years after which it wil sold for P1,000. Find the book value during the first year if sum-oF-the-years. nat SOYD = G2) n (SOYD) depreciation is used. 2 Seestios «,prsseon ay pasmos 6. boon sow (ro. ss sous: Dep; = (10/55)(9000 - 1000) = 1,454.54 Depa = (9/55)(9000 - 1000) = 1,309.10 Dopr = 1454.54 + 1309.10 = P2763.64 Book value after 2 years is: =FC-Depr 9000 - 2763.64 = 6,236.35 10 Deps = <1 (Fc - sv) ECONomics -8 A asset is purchased for P500,000. The salvage value in 25 years is P100,000. What is the depreciation using straight line method? Dep, = 12000 - 1000) = Pr,454.54 7m he a ee PART 1 - Engineering Economics - Depreciation 109 108 PART 1 - Engineering Economies - Depreciation A. P12,000 ©. P14,000 ale value at the end of five years is six milion pesos. Using the sum-ot-years- B. P16,000 D. Pt8,000 method of depreciation, what is the book value of the jet plane at the end of 3 ‘SOLUTION: c. P20 D. P34M Fo-sv 7 500,000 ~ 100,000 = P16,000 25 ECONOMICS - 9 ‘A asset is purchased for P500,000. The salvage value in 25 years is P100, (6115)(76 - 6) vn ne apna ee ac iiare- a) eee Sage aaee ‘soLuTioN: Dy 2 2838+ 1307+ 14 aaa soYD icONOMICS - 42 large profitable corporation has purciased a jet plane for use by its executives. he cost of the plane is P76 million. it has a useful fe of 5 years” The estimated ie value at the end of five years is six millon pesos, Using staight line vens= 22 00000-10000) = Pan.ore8 ‘A. P14 milion ©. P20 milion ECONOMICS - 10 * 8 452milion D. P34 milion Ozok Systems Intemational is considering tying a ‘ . {equipment wil hve a salvage value of P8,000 afer a useful ie of 14 years. Us BOLUTION: ‘sum-of-years-cigit (SOYD) method of deprecation, compute the deprecation ch ‘on the equipment forthe third year ofits useful Ife p= FC-sv : ‘A. P16,400.00 ‘C. P8,200.00 a B. 4,800.00 0. P2.400.00 o= 8 «pram eu ‘Solving for the book value after 3 years: Dr = 34) = 42M BV3 = FC-Dy Y . soYD BV;= 76-42 = Pam sovo= B+ 14) = 105, eps = depreciation charge in the 3rd year 72 (60.000 — 8000) = 4,800.00 705 Economics - 13 ‘A company purchases an asset for P10,000 and plans to keep it for 20 years. If the balvage value is zero at the end of the 20th year. what is the depreciation charge in {he third year? Using sum of the years digit method of depreciation, A P500 ©. P905, B Pes7 D. Pes2, Dep ECONOMICS - 11 A large profitable corporation has purchased a jet plane for use by its executiv ‘The cost ofthe plane is P76 tilion. Ithas a use fe of 5 years. The estimated PART 1 - Engineering Economics - Depreciation 111 p = 200,000 -0 20 depreciation tax held annually 0.40(10,000) = P4000 110 PART 1 - Engineering Economics - Depreciation ‘SOLUTION: -(est)n sovo (223) sovo @ 20 = 210 ‘The present worth of depreciation tax held for 20 years is P = 4000] 47" 1) «pop 492.52 0.141.147 Ihe depreciation charge for the 3° year: 18 28 (10000 - 0) = 887.14 Deps = 379 JONOMICS - 17 (ME Board Oct. 1996) Machine has an initial cost of P50,000.00 and a salvage value of 10,000 after 10. rs. What i the straight line method of depreciation rate as a percentage of the al cost? nes ssn tl Pataca a A. 10% ©. 12% ee iC 80% 8 ae Bo Berm B. 10% LUTION souuTion: Annual Depreiaton = FO—8V Anns Depreciation = 50860-19600 499999 Depreciation rate = 4,000/50,000 = 8% Depreciation Rate = 1200/20,000 = 6% ECONOMICS - 18 (ME Board) ‘A machine shop purchased 10 years ago a milling machine for P60,000. A straight line depreciation reserve had been provided on a 20 years life of the machine. The Downer of the snactine shiop desires to replace the old miling machine of a modem lit with many advantages costing P100,000. it can sell the old unit for P20,000, How much new capital will be required for the purchase? ECONOMICS -15 _ Fanos a sighine dopocaton y ‘A. (100%-% net salvage value)/estimated service life. 6 (Sorc Slvagevautestatoa service He sot eago vue S, wouron EeoNOMCS AE ERO a penned tonto ste oy 6) «ena ono 16 we oh eat Sm iets haem Bua soo m New capital required = 100,000 - (30,000 + 20,000) = 50,000 ECONOMICS - 49 (ME Board) B, P26,500.00 D. Pag Foundation and installation costs were P25,000. Other incidental expenses years. Find the appraisal value of the mil, using straight line depreciation , at the end of 10 years, ‘A. P2085,000 ©. P215,000 B. 225,000 D. 235,000 112 PART 1 ~ Engineering Economics - Depreciation : ens PART 1 - Engineering Economics - Depreciation 113 Dope = (FC-SV) (<5) 160,000 + 5,000 + 25,000 + 20,000 = P410,000 ‘410,000 ~ 60,000 17,000 eps = (120,000 - 12,000)9/55) 2y Dep: = P17,673 BV; = 410,000 - 10(17,000) = 235,000 JONOMICS, - 23 ‘asset is purchased for 120,000.00. Its estimated life is 10 years, after which it be sold for 12,000.00. Find the depreciation for the first year using the sum-o- -years-digit method. 1 ECONOMICS - 20 (ME Board) ‘A plant erected to manufacture socks has a first cost of P10,000,000 wi Colne Sage tno 103089 tee of a5 Yours Fra toe “era o. piszto tSnomet D100) ng hind method nosy on ret ls So sea Senaa Soe a eae nSama200 ———_c. ps.gz00 TION Gpiaias 8 poases00 SOLUTION: sow -(*21)p p = {FC—SV) . (10,000,000 - 100,0000.06) Gort MeO sow -(122)10~ 05 b= Peas = +1 Bea Se oT Dy = (120,000 - 12,000)(10/55) = P19,637 pzsesn0 FEB scoo.u0 2570400 economes-24 PS ton X Soe tna soft costo P1000 ae savoge vl of 720.00 ar 1 years. Determine the annual depreciation using straight line method, ‘A. P6,000 C.P8,000, ECONOMICS - 21 (ME Board) B.P7,000 D.P9,000 unit of welding machine cost P45,000 with an estimated life of § yaar te sav value is P2,500. Find its depreciation rate by sinking fund method with 8.5% inte SOLUTION: A. PTA72.54 c. P8,172.54 B. P10,172.54 D. P9.172.54 _Fo-sv SOLUTION: oe (o-svy = P8000 p= Fo-svy (+94 (46,000 ~ 2.500)(0.085} ECONOMICS - 25 p=% 1 ae fl = pr.tre54 ‘A generator has an estimated salvage value of P40,000 after 12 years. Using ne : straight line depreciation method the depreciation charge is P30,000. Determine the fist cost of generator ECONOMICS - 22 (ME Board Apr. 1997) ‘A. P100,000 c. P300,000 ‘An asset is purchased for P120,000.00. its estimated life is 10 years, after whi B.P200,000 _P400,000 ‘it will be sold for P12,000.00. Find the depreciation for the second year using 1 ‘sum-of-the-years- digit method, SOLUTION: ‘A. P19,000 c. P18,200 B. P17.673 D. P18.400 p.Fo-sv SOLUTION: A SOYD = 142434445+6+7+8+9+10 = 55 114 PART 1 - Engineering Economics - Depreciation PART 1 - Engineering Economics - Depreciation 115 30090 = FE=40000, LUTION: 72 FC-sv Fc = 400,000 eo 30000-3000 _ 799 ECONOMICS -26 0 ‘The annual depreciation of P20,000 has been reserve for a machine for a mat sing straight line for 8 years, If the first cost is P200,000, determine the ss ‘Solving forthe present book value: BVs = FC—Ds = 3000-6 (2700) value of the machine. ‘A. P40,000, c. P60,000 BVs = P13800 BB. P50,000 .P 70,000 ‘Sunk cost = book value ~ actual resale value ‘Sunk cost = 13800-10000 = P3800 SOLUTION: (CONOMICS - 29 Tathe machine was purchased 12 years ago for P50,000. As the life of the machine Jas 20 years, straight line depreciation reserve has been provided. It can sell the ‘1d unit for P45, ‘new capital fequired to buy the new machine. ‘A.P25,000 c. P40,000 8. P30,000 1D. P35,000 SOLUTION: ECONOMICS - 27 ‘A machine has a first cost of P80,000 and salvage value of 10,000 for 10 ye: Fo-sv Using straight line, determine the book value after 6 years. 0. fe ‘A-P36,000 ©. P38,000 B. P36,000 1D. P40,000 p= 50000-9 ~ 2500 ‘SOLUTION: ‘Amount reserve = 12( 2500) = 30000 New Capital needed = 75000 ~ 30000 - 15000 p- Fo-8v New Gapital needed = 30000 a p= 20000-10000 — 7999 ECONOMICS - 30 10 [An engine has a first cost of P450,000 and has an installation cost of P50,000. The estimated salvage value is PS0,000 after 10 years. Determine the total Ds = 6D = 6(7000) Ds = 42,000 dopreciation after 7 years. BV. = FC—De = 80000 ~ 42000 ‘A. P315,000 . P325,000 BV. = P38,000 B. P320,000 1D. P330,000 SOLUTION: ECONOMICS - 28 ‘An air-conditioning unit was bought 30,000 six years ago. It will have a sal »- Fo=8v Value of 3,000 four years from now. It is sold now for P10,000. Using straight-in ‘method, determine the sunk cost. ‘A. P3800 ©. P4,200 B.P4,000 D. P4400 (450000 + 50000) - 50000 10 Dy = 7D = 7 (45000) = P315000 = 45000 116 PART 1 - Engineering Economics - Depreciation PART 1 - Engineering Economics - Depreciation 117 | ECONOMICS - 31 Water pipe has a first cost of P20,000 and no salvage value after 15 years, Us sinking fund depreciation, determine the annual depreciation for 16% interest. * ‘A. P472.87 .P283.47 D,, = 29628.49] 08)" =) _ pa17350.86 B.P619.09 D.P387.15 6 0.08 eon JONOMICS - 34 ‘evaporator cost P45,000 5 years ago with an estimated life of 8 years. Its age value is P2,500. Find the book value if it can sell the old unit for P20,000 eee ev 12% interest rate. ai —1 "A. P15,048.56 ©. P17,048.56 8. P19,048.56 D. P23.048.58 {20000 —0)(018) _ppy 45 (1+ 0.76)" 1 uTio o-svyi ECONOMICS - 32 Om ar a1 Agasolina angina has an annual depreciation of P10,000 for 10 years and sal (iP — value P16,000. Using sinking fund depreciation with 12% inorest. Determine p = (45000 - 2500)(0.12) _ pa4gs. 37 first cost of the engine. (1+ 0.12)" =1 4 P193.487.35 c.P219.487.98 B.P203,487 38, D.P223,487 35, oft] i SOLUTION: . (1.12 Can

    Вам также может понравиться