edd1.0
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Registered: 17th Sep 08
Location: kettering
User status: Offline
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hello , I am doing some accounts work in my uni project. One thing is puzzling me though , i have to work out depreciation using the straight line method. The reason I'm struggling is because i've been giving the annual depreciation rate of 20% but only need to work it out for 6 months , its' £60,000 at 20%
if anyone could help that would be great , i know yearly it will depreciate £12,000 but i don't think that means that in 6 months it will depreciate £6,000 ? or does it ?
Thanks
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Matt L
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Registered: 17th Apr 06
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just divide the annual amount by 2  .
unless the question states otherwise it will assume its spread evenly over the 12 months.
[Edited on 23-11-2012 by Matt L]
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LeeM
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Registered: 26th Sep 05
Location: Liverpool
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£6k seems right, but seeing as its uni there's probably a daft reason why it's not
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luciaadr
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Registered: 11th Aug 04
Location: Bexleyheath, Greater London
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Matt is right
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edd1.0
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Registered: 17th Sep 08
Location: kettering
User status: Offline
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i thought that was right , just thought of it to be a bit to easy , i wasn't sure if the amount would change each month as the value its worth will decrease monthly therefore making the amount of depreciation each month different ? if that makes sense ? , its only part of a main account so it can't be to difficult i think they are trying to catch people out as its a 6month period not the 12month that the depreciation is listed for
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dannymccann
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Registered: 9th Aug 06
Location: Doddington, Lincolnshire
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quote:
Originally posted by edd1.0
i thought that was right , just thought of it to be a bit to easy , i wasn't sure if the amount would change each month as the value its worth will decrease monthly therefore making the amount of depreciation each month different ? if that makes sense ?
That's the reducing balance method
I don't handle Fixed Asset Depreciation at work, I'm only VAT & Tax so it certainly isn't my strong area, but from my studies I think I remember you would have to work it out month by month to use that method, unless you have one of those fancy LED calculators or know the equation...
An Excel spreadsheet would sort that in 2 mins tho 
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Ian
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Registered: 28th Aug 99
Location: Liverpool
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quote:
Originally posted by edd1.0
i have to work out depreciation using the straight line method.
Which doesn't model depreciation very well, hence the answer looking too simple.
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Russ
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Registered: 14th Mar 04
Location: Armchair
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quote:
Originally posted by Matt L
just divide the annual amount by 2 .
unless the question states otherwise it will assume its spread evenly over the 12 months.
[Edited on 23-11-2012 by Matt L]
:playboyaccountant:
[Edited on 24-11-2012 by Russ]
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