# A machine cost 12800,it will be used for 5years and is then sold at a scarp value of 400 . calculate the depreciation for each year using , reducing balance method, using a depreciation rate of 50%

All QuestionsA machine cost 12800,it will be used for 5years and is then sold at a scarp value of 400 . calculate the depreciation for each year using , reducing balance method, using a depreciation rate of 50%
Faustina asked 9 months ago

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1 Answers
StopLearn Team Staff answered 9 months ago

To calculate the depreciation for each year using the reducing balance method with a depreciation rate of 50%, we’ll apply the following steps:

1. Calculate the depreciation amount for the first year: Depreciation for Year 1 = Initial Cost * Depreciation Rate Depreciation for Year 1 = \$12,800 * 0.5 = \$6,400
2. Calculate the Net Book Value (NBV) after the first year: NBV after Year 1 = Initial Cost – Depreciation for Year 1 NBV after Year 1 = \$12,800 – \$6,400 = \$6,400
3. Repeat the process for subsequent years, using the NBV from the previous year: Year 2: Depreciation for Year 2 = NBV after Year 1 * Depreciation Rate Depreciation for Year 2 = \$6,400 * 0.5 = \$3,200 NBV after Year 2 = NBV after Year 1 – Depreciation for Year 2 NBV after Year 2 = \$6,400 – \$3,200 = \$3,200
Year 3: Depreciation for Year 3 = NBV after Year 2 * Depreciation Rate Depreciation for Year 3 = \$3,200 * 0.5 = \$1,600 NBV after Year 3 = NBV after Year 2 – Depreciation for Year 3 NBV after Year 3 = \$3,200 – \$1,600 = \$1,600
Year 4: Depreciation for Year 4 = NBV after Year 3 * Depreciation Rate Depreciation for Year 4 = \$1,600 * 0.5 = \$800 NBV after Year 4 = NBV after Year 3 – Depreciation for Year 4 NBV after Year 4 = \$1,600 – \$800 = \$800
Year 5: Depreciation for Year 5 = NBV after Year 4 * Depreciation Rate Depreciation for Year 5 = \$800 * 0.5 = \$400 NBV after Year 5 = NBV after Year 4 – Depreciation for Year 5 NBV after Year 5 = \$800 – \$400 = \$400
The machine is then sold at a scrap value of \$400.

Therefore, the annual depreciation amounts for each year using the reducing balance method with a depreciation rate of 50% are as follows: Year 1: \$6,400 Year 2: \$3,200 Year 3: \$1,600 Year 4: \$800 Year 5: \$400

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