Question

Fylder Construction Bhd bought a full hydraulic carrier-mounted crane. The cost was RM155,000. The company expected to used the crane for 5 years and provides for salvage value at the end of five years to be RM15,000. As the Finance Manager for the company, you suggested that the company implements a straight line method depreciation. Your company director has no knowledge on depreciation, therefore you are preparing a report on the carrier-mounted crane depreciation to present to him. You needed the following information to be included in the report.

(a) Calculate the annual depreciation.

(b) Prepare the depreciation schedule

(c) Prepare the accumulated depreciation account for the first 3 years.

Answer 1

Given: Cost of crane= Rs.155000

Salvage value end of five years Rs.15000

To find:

a. Annual Depreciation

b. Depreciation Schedule

c. accumulated depreciation account for first three years

Solution:

a. Annual Depreciation = Cost of crane- Salvage Value/ useful life of crane

= 155000-15000/5

=140000/5

=Rs. 28000

Hence Annual Depreciation is Rs.28000

b.Depreciation schedule

Year	Book Value (Beginning of the year)	Depreciation	Book Value (End of the year)
1	155000	28000	127000
2	127000	28000	99000
3	99000	28000	71000
4	71000	28000	43000
5	43000	28000	15000

c.accumulated depreciation account for the first three years

Accumulated Depreciation Account

Year	Depreciation amount
1	28000
2	28000
3	28000
Total	84000

Hence Accumulated Depreciation for the first three years is Rs.84000