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It means that, over a 5 year period, the value of the asset falls by 80 per cent (100 - 20 = 80).

This is STRAIGHT line so that every year the depreciation 16% of the price at the start of the whole PERIOD.

In calculating depreciation in the normal way, the depreciation each year is a percentage of the price at the start of that YEAR.

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Q: What does straight line depreciation over 5 years to a residual cost of 20 percent mean?
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Which depreciation method does not use residual value in calculating the first years depreciation expense?


Depreciation straight line method?

Straight line depreciation method is that method in which fixed amount of depreciation is charged to all fiscal years in which that asset is used.

Straight line method of depreciation?

Straight line depreciation method is that method in which fixed amount of depreciation is charged to all fiscal years in which that asset is used.

Which type of depreciation method accelerates depreciation in the early years of an asset life?

Straight line

What is the definition for 'residual value'?

Residual value is the future value of a good after depreciation of its initial value. For example you bought a car for $20,000. After two years and 60,000 of mileage it will value of $10,000.

What are differences between Straight - Line and Diminishing Balance Methods of charging depreciation?

The straight line method assumes that the useful life of an asset is evenly distributed to its life, so results in a constant depreciation charge per year provided the estimated residual value remains constant over the life of the asset. for example, Asset's value = $100,000 useful life = 10 years residual value = $20,000 depreciation per year = (100,000 - 20,000)/10 = $8000 per year The diminishing balance method assumes that the asset is more useful on the early days and less useful in the later days, so it results in more depreciation charge in the early years and the charge decreases as the asset becomes old. for example, Asset's value = $100,000 residual value = $20,500 depreciation rate = 10% useful life = 15 years depreciation year 1. (100,000 * 10%) = 10,000 depreciation year 2. (100,000 - 10,000 W1) * 10% = 9000 depreciation year 3. (100,000 - 19,000 W2)* 10% = 8100 depreciation year 4. (100,000 - 27,100 W3)* 10% = 7290 W1 = depreciation of year 1 W2 = depreciation of year 1 and year 2 combined W3 = depreciation of year 1, year 2 and year 3 combined

What is the different sum-of-the-year digits method versus the straight line method?

The sum-of-the-year digits method is an accelerated depreciation method that allocates a larger portion of the asset's cost to the early years of its useful life, while the straight-line method evenly distributes the depreciation expense over the asset's useful life. As a result, the sum-of-the-year digits method results in higher depreciation expense in the earlier years and lower depreciation expense in the later years compared to the straight-line method.

A van purchased for 44000 is depreciated over 5 years using straight line depreciation what is the depreciation equation?

the depreciation equation =asset price / 5 =44000/5 =8800

Record depreciation on the remaining truck it has an estimated residual value of 15000 and estimated useful life of eight years?

James' mom purchased a new truck for $39,310 four years ago. James, who is a mechanic, estimated that the truck's present value is $25,250. What is her depreciation? Formula: Depreciation = Purchase Price - Today's Value/Number of Years Owned

How is the straight line depreciation method different from declining balance method?

The straight-line depreciation method allocates the cost of an asset evenly over its useful life, while the declining balance method applies a fixed depreciation rate to the asset's declining book value each year. Straight-line method results in equal annual depreciation expenses, while declining balance method typically yields higher depreciation expenses in the early years of an asset's life.

What disclosure is required for a change from sum of the years digits to a straight line Method?

re-computation of current and future years' depreciation

Why accumulated depreciation is credited explain with example?

Accumulated depreciation is contra for related assets shows in balance sheet to show the reduction in actual cost of asset Example: if 1 asset purchased for 100 for 10 years then per year depreciation is 10 with straight line depreciation so after ten years actual cost will be nill while accumulated depreciation will be 100.