Question 1
Using the reducing balance formula, find the book value (to the nearest dollar) of a car
at the end of the fifth year if it originally cost $29 590 and is depreciated at 11$p.a.
Question 2
Mr. Power has a security system installed in his shop at a cost of $20 400. The
expected life of the alarm is 5 years with a salvage value of $4 400. Using the
straight-line method of depreciation
(a) find the annual depreciation
(b) the annual rate of depreciation
(c) prepare a depreciation schedule
Question 3
Describe the reducing balance method of depreciation and explain how it differs from the
straight-line method.
Question 4
A truck driver bought a set of tyres for this truck at a total cist of $5 000. The
tyres have an estimated life of 15 000km with a salvage value of $500 (as a set). If
the units of use method of depreciation is used find the:
(a) rate of depreciation per kilometre of use
(b) book value of the tyres after 6 500 kilometres.
Question 5
Prepare a 4-year depreciation schedule for poker machines with an original cost of $150
000 and a rate of depreciation of 25%p.a. (reducing-balance-method)
