Q3: A firm buys a delivery van for business use. The van costs £25,000 and is expected to last five years with an estimated scrap value of £500. Complete the following table comparing the depreciation and net book values for each year of the asset's life using the straight line and reducing balance methods of depreciation (take the rate of 50% for reducing balance). Cost Depreciation year 1 NBV end year 1 Depreciation year 2 NBV end year 2 Depreciation year 3 NBV end year 3 Depreciation year 4 NBV end year 4 Depreciation year 5 NBV end year 5

Q3: A firm buys a delivery van for business use. The van costs £25,000 and is expected to last five years with an estimated scrap value of £500. Complete the following table comparing the depreciation and net book values for each year of the asset's life using the straight line and reducing balance methods of depreciation (take the rate of 50% for reducing balance). Cost Depreciation year 1 NBV end year 1 Depreciation year 2 NBV end year 2 Depreciation year 3 NBV end year 3 Depreciation year 4 NBV end year 4 Depreciation year 5 NBV end year 5

Name: Q3: A firm buys a delivery van for business use. The van costs £25,00
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Description: Q3: A firm buys a delivery van for business use. The van costs £25,000 and is expected tolast five years with an estimated scrap value of £500. Complete the following table comparingthe depreciation and net book values for each year of the asset's l

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Q3: A firm buys a delivery van for business use. The van costs £25,000 and is expected to
last five years with an estimated scrap value of £500. Complete the following table comparing
the depreciation and net book values for each year of the asset's life using the straight line
and reducing balance methods of depreciation (take the rate of 50% for reducing balance).
Cost
Depreciation year 1
NBV end year 1
Depreciation year 2
NBV end year 2
Depreciation year 3
NBV end year 3
Depreciation year 4
NBV end year 4
Depreciation year 5
NBV end year 5

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