Income-producing buildings bui
Income-producing buildings built after 19 September 1987 aredepreciated at 2.5% pa. A small commercial building is built afterthis date at a cost of $18.5 million. Use correct depreciationformulas and show full working out for your answers.
(a) Find it written down value after 8 years.
(b) Find its written down value after 9 years
(c) What was its depreciation in the ninth year.
(d) Calculate its depreciation in the 15 th year.
Answer:
|
Asset value |
18,500,000.00 |
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|
Depreciation rate |
2.50% |
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The question does not mention the type of depreciation |
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It is assumed to ne SLM |
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Depreciation for each year |
462,500.00 |
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|
1 |
WDV for 8th year |
||
|
Depreciation for 8 years (462500*8) |
3,700,000.00 |
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|
WDV = Book value less depreciation |
14,800,000.00 |
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|
2 |
WDV for 9th year |
||
|
Depreciation for 1 year |
462,500.00 |
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WDV for 9th year = 8th year WDV less 1 yeardepreciation |
14,337,500.00 |
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|
3 |
Depreciation at 9 th year |
462,500.00 |
|
|
(Since SLM Same depreciation) |
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|
4 |
Depreciation at 15th year |
462,500.00 |
|
|
(Since SLM Same depreciation) |
|
Assume depreciation to be reducing balance |
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See below calculations |
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|
2.50% |
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|
a |
b |
c |
|
|
(a x 2.5%) |
(a-b) |
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|
Year |
Book value |
Depreciation |
WDV |
|
0 |
18,500,000.00 |
462,500.00 |
18,037,500.00 |
|
1 |
18,037,500.00 |
450,937.50 |
17,586,562.50 |
|
2 |
17,586,562.50 |
439,664.06 |
17,146,898.44 |
|
3 |
17,146,898.44 |
428,672.46 |
16,718,225.98 |
|
4 |
16,718,225.98 |
417,955.65 |
16,300,270.33 |
|
5 |
16,300,270.33 |
407,506.76 |
15,892,763.57 |
|
6 |
15,892,763.57 |
397,319.09 |
15,495,444.48 |
|
7 |
15,495,444.48 |
387,386.11 |
15,108,058.37 |
|
8 |
15,108,058.37 |
377,701.46 |
14,730,356.91 |
|
9 |
14,730,356.91 |
368,258.92 |
14,362,097.99 |
|
10 |
14,362,097.99 |
359,052.45 |
14,003,045.54 |
|
11 |
14,003,045.54 |
350,076.14 |
13,652,969.40 |
|
12 |
13,652,969.40 |
341,324.23 |
13,311,645.16 |
|
13 |
13,311,645.16 |
332,791.13 |
12,978,854.03 |
|
14 |
12,978,854.03 |
324,471.35 |
12,654,382.68 |
|
15 |
12,654,382.68 |
316,359.57 |
12,338,023.12 |
1 WDV 8 thyear 14,730,356.91
2 WDV 9 thyear 14,362,097.99
3 Depreciation 368,258.92
4 Depreciation 316,359.57
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