Example
of Balancing Depreciation
Machinery written down
value at the beginning of year was 30,000 and residual value at the end of year
4 is 40,000. Project life was four year?
Solution
As the project has ended
so therefore the asset is to be fully depreciated in year 4, and this can be
done by following formula, it is to be noted that depreciation rate is no more
relevant is year 4 (at end of project).
Depreciation = Residual value
end of year 4 – WDV at beginning of year 4
= 40,000-30,000
= 10,000
(balancing depreciation for year 4 or at end of project)
