Methods of Depreciation: Straight-Line, Diminishing Balance, Sum of Years Digits, and Units of Production

Question 1 (Part 1)
The first method of calculating depreciation is the straight-line method. Under this method depreciation is
uniform over the years.
DEPRECIATION SCHEDULE USING STRAIGHT LINE METHOD
YEAR ENDING 3OTH JUNE
useful life= (1,320000-100000) 1,220,000
YEAR PERCENTAG
E
% AMOUNT TO
BE
DEPRECIATED
ANNUAL
DEPRECIATION
EXPENSE
CARRYING
AMOUNT
accumulated
depreciation
2020 100/10 10% 1,220,000
122,000
1,098,000 122,000
2021 100/11 10% 1,220,000
122,000
976,000 244,000
2022 100/12 10% 1,220,000
122,000
854,000 366,000
2023 100/13 10% 1,220,000
122,000
732,000 488,000
2024 100/14 10% 1,220,000
122,000
610,000 610,000
This method uses same figures for the 10-year period depreciation rate is
100/10 = 10% per annum

Question 1 Part 2
The second way to calculate depreciation is the diminishing balance method. And it is calculated as
shown below
DEPRECIATION SCHEDULE USING DIMINISHING BALANCE METHOD
YEAR ENDING 3OTH JUNE 2018
useful life= (1,320000-100000) 1,220,000
YEAR PERCENTAG
E
AMOUNT TO BE
DEPRECIATED
ANNUAL
DEPRECIATIO
N EXPENSE
CARRYING
AMOUNT
accumulate
d
depreciation
2020 100/10 10% 1,220,000 122,000 1,098,000 122,000
2021 100/11 10% 1,098,000 109,800 988,200 231,800
2022 100/12 10% 988,200 98,820 889,380 330,620
2023 100/13 10% 889,380 88,938 800,442 419,558
2024 100/14 10% 800,442 80,044 720,398 499,602
Sum of years digits
initial
cost
$1,320,000
SYD = N(N+1)/2 N= 10
SYD 10(10+1)/2 110 Syd=55 55