## Depreciation - numerical questions

#### Question 1

The manager of Collison Ltd has purchased a new price of equipment to help speed up the production line. The equipment cost $50,000 and is expected to last for five years. At the end of this period the equipment can be traded in for the value of $4000.

#### Required

You are required to calculate the depreciation for each year on the asset using both straight line and reducing balance methods. Show the net book value for the van at the end of each of the 5 years for each method (assume that 40% is to be used for the reducing balance method).

#### Question 2

Fiona Palmer, a sole trader purchases a delivery van for the sum of $12,000. It has as estimated life of 6 years and a trade-in value of $3,000.

#### Required

You are required to calculate the annual depreciation on the van using both straight-line and reducing balance methods.

Show the balance remaining - the net book value - on the van at the end of each of the 6 years for each method (assume that 20% is to be used for the reducing balance method).