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Depreciation Problems With Answers

This document provides 9 examples of depreciation problems involving machinery, equipment, and other assets purchased by various companies. The problems demonstrate calculations for depreciation amounts using different methods like straight line, declining balance, double declining balance, sinking fund, and sum-of-years digits. The key details provided are the original and salvage values of the assets, useful lives, and interest rates where applicable to calculate annual and periodic depreciation charges.

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JHEZERIE NEPOMUCENO
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167 views

Depreciation Problems With Answers

This document provides 9 examples of depreciation problems involving machinery, equipment, and other assets purchased by various companies. The problems demonstrate calculations for depreciation amounts using different methods like straight line, declining balance, double declining balance, sinking fund, and sum-of-years digits. The key details provided are the original and salvage values of the assets, useful lives, and interest rates where applicable to calculate annual and periodic depreciation charges.

Uploaded by

JHEZERIE NEPOMUCENO
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CEE 109 Depreciation Problems

1. A television company purchased machinery for P 100,000 on July 1, 1979. It is estimated that it will have a
useful life of 10 years, scrap value of P 4,000, production of 400,000 units and working hours of 120,000.
The company uses the machinery for 14,000 hours in 1979 and 18,000 hours in 1980. The machinery
produces 36,000 units in 1979 and 44,000 units in 1980. Compute the depreciation for 1980 using (a)
straight line, (b) working hours and (c) output method.
[(a) Php 9,600 (b) Php 14,400 (c) Php 10,560]
2. A manufacturing company buys an electric motor of P 50,000. It estimates that the motor’s useful life is 20
years and that it can then be sold for P 5,000. Using straight line method, what is the annual depreciation
charge?
[Php 2,250]
3. An equipment costs P 10,000 with a salvage value of P 500 at the end of 10 years. Calculate the annual
depreciation by (a) straight line method (b) sinking fund method at 4% interest.
[(a) Php 950 (b) 13,608]
4. A plant erected to manufacture socks has a first cost of P 10,000,000 with an estimated salvage value of P
100,000 at the end of 25 years. Find its appraised value to the nearest P 100 by the sinking fund method,
assuming an interest rate of 6% at the end of 10 years.
[Php 7,621,600]
5. A certain machinery costs P 50,000, lasts 12 years with a salvage value of P 5,000. Money is worth 5%. If
the owner decides to sell it after using it for 5 years, what should his price be so that he will not lose or
gain financially in the transaction?
[Php 34,378.25]
6. A machine which cost P 10,000 was sold as scrap after being used for 10 years. If the scrap value was P
500, determine the total depreciation and book value at the end of the 5 th year using straight line method.
[Php 4,750, Php 5,250]
7. An industrial plant bought a generator set for P 90,000. Other expenses including installation amounted to
P 10,000. The generator set is to have a life of 17 years with a salvage value at the end of life of P 5,000.
Determine the depreciation charge during the 13 th years and the book value at the end of 13 years by (a)
Declining balance method (b) Double Declining balance method (c) Sinking Fund method at 12% (d) SYD
method.
[(a) Php 1,949 (b) Php 10,118 (c) Php 19,649; Php 45,539 (d) Php 3,105; Php 11,209]
8. Determine the rate of depreciation, the total depreciation, the total depreciation up to the end of the 8 th
year and the book value at the end of 8 years for an asset that costs P 15,000 new and has an estimated
scrap value of P 2,000 at the end of 10 years by (a) Declining balance method (b) Double Declining balance
method.
[(a) Php 12,008 (b) Php 12,483]
9. A telephone company purchased a microwave radio equipment for P 6,000,000. Freight and installation
charges amounted to 3% of the purchased price. If the equipment shall be depreciated over a period of 8
years with a salvage value of 5%, determine (a) annual depreciation charge using straight line method (b)
depreciation charge during the fifth year using sum-of-years-digits method.
[(a) Php 733,875 (b) Php 652,333]

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