All Saints Plc acquired a machine for £50 000 on 1 January.This asset has useful life of 4 years and a residual value of £10 000.The declining balance rate adopted by the entity for similar machines is 40%.What is the depreciation expense for the first year,if the depreciation policy adopted is straight-line,declining-balance or sum-of-digits method,respectively?

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Quizplus · Accepted Answer

Straight-line depreciation: (50,000 - 10,000) / 4 = 10,000Declining-balance depreciation: 50,000 * 40% = 20,000Sum-of-digits depreciation: (4 + 3 + 2 + 1) / 10 * (50,000 - 10,000) = 16,000

All Saints Plc Acquired a Machine for £50 000 on 1