Depreciation

Question

Suppose a college student buys a $3000 computer , the life span of the computer is 4 years, after which its value will be $200. The difference between $3000 and $200, or $2800 may be deducted from the students taxable income over a 4 year period. The sum of the years is computed by1+2+3+4 = 10. With this method, 4/10 of $2800 is deducted the first year and so on, until 1/10 is deducted the fourth year. Both depreciation methods yield a total deduction of 2800 over 4 years. Find an arithmetic sequence that gives the amount depreciated each year by each method. Write a series whose sum is the amount depreciated over 4 years by each method.

Answer 1

Let C(t) be a computer's value over time

r is rate of depreciation (has to be les than 1 or less than 100%)

C(t)= p(r)^t

$200= $3,000(r)^4

r^4= 1/15

r = approximatley 50.8% per year

Your rate of depreciation is approximately 50.8% per year

1st year=  0.508* 3000= $1,524.40

2nd Year= 0.508 * 1,524.40= $774.39

3rd= 0.508 * $774.39= $393.39

4th year= $199.84

Comments

2/5 , 3/10, 1/5, 1/10 of 2800= $1120+ $840+ $560+ $280= $2800
1st $1880
2nd $1040
3rd $480
4th $200

Answer 2

can i know as per IAS 17, at what timeperiod we have to book depreciation means is it require per IAS to book quarterly or inat 6 month ?

Answer 3

the rate of depreciation is aroud 49.19 percent.