VISHWAKARMA INSTITUTE OF TECHNOLOGY PUNE - 411037

A HOME ASSIGNMENT TOPIC

ESTIMATION OF DEPRECIATION
SUBMITTED BY –
Name Roll No
Jitendra Sanap 43
Sangharatna Bombarde 44
Preyas Videkar 55
Prasad Khade 16
Akash Shirse 49

Example :- The original value of a piece of equipment is $22,000, completely installed and ready for use. Its salva
2000 at the end of a service life estimated to be 10 years. Determine the asset ( or book) value and depreciation o
years using ,a) Straight-line-method and b)Double-Declining-balance-method

Solution:- 1) By Straight Line Method

v= $22,000 Rs
vs = $2,000 Rs
n= 10 year
d= V-Vs/n 2000
Asset value after 5 years = Va, where a= 5
Va = V - ad $12,000

Solution:- 2) By using double declining balance method

d= 2(undepreciated amount)/n

d= Annual depreciation
n= Service life
Depreciation amount
Year For year every year
Year 1 d= (100/10) 20 % 0.2 $4,400

Year 2 d= (80/10) 16 % 0.16 $3,520

Year 3 d= (64/10) 12.8 % 0.128 $2,816

Year 4 d= (51.2/10) 10.24 % 0.1024 $2,252.80

Year 5 d= (40.96/10) 8.192 % 0.08192 $2,252.80

UNE - 411037

stalled and ready for use. Its salvage value is estimated to be $

r book) value and depreciation of the equipment at the end of 5
ble-Declining-balance-method

Depreciation amount Book value

Va = V(1-2/n)^a
17600

14080

11264

9011.2

7208.96
 Example :- The original value of a Heat Exchanger equipment is Rs.35000, completely installed and ready
( or book) value and depreciation of the equipment at the end
Solution:- Straight line method
v= $35,000.00 Rs
vs = $3,000 Rs
n= 7 year
d= V-Vs/n $4,571.43
Asset value after 5 years = Va, where a= 6
Va = V - ad $7,571.43 Rs

Solution:- By using double declining balance method

d= Annual depreciation
n= Service life

d= 2 (undepreciated amount)/n
undepreciated amount = 100
For year every year
Year 1 Dpreciation (%) Depreciation amou
1 d= 28.57142857 %
71.42857143
2 d= 20.40816327 %
51.02040816
3 d= 14.57725948 %
36.44314869
4 d= 10.4123282 %
26.03082049
5 d= 7.437377283 %
18.59344321
6 d= 5.312412345
completely installed and ready for use. Its salvage value is estimated to be Rs3000 at the end of a service life estimated to be 7 years. Dete
of the equipment at the end of 6 years using ,a) Straight-line-method and b)Double-Declining-balance-method

Book value (Va)

Depreciation amount =(V(1-2/n)^a)
$10,000 $25,000.00

$7,143 $17,857.14

$5,102 $12,755.10

$3,644 $9,110.79

$2,603 $6,507.71

$1,859 $4,648.36
 estimated to be 7 years. Determine the asset
hod
Name of equipment Compressor
Original Value 24000
Salvage Value 1000
Year (n) 15
Asset value 10
Solution:- Straight line method
v= $24,000.00 Rs
vs = $1,000 Rs
n= 15 year
d= V-Vs/n $1,533.33
Asset value after 5 years = Va, where a=
Va = V - ad $8,666.67 Rs

By using double declining balance method

d= Annual depreciation
n= Service life

d= 2 (undepreciated amount)/n
undepreciated amount = 100
For year every year
Year Dpreciation (%)
1 d= 13.33333333 %
86.66666667
2 d= 11.55555556 %
75.11111111
3 d= 10.01481481 %
65.0962963
4 d= 8.679506173 %
56.41679012
5 d= 7.522238683 %
48.89455144
6 d= 6.519273525 %
42.37527791
7 d= 5.650037055 %
36.72524086
8 d= 4.896698781 %
31.82854208
9 d= 4.24380561 %
27.58473647
10 d= 3.677964862 %
 10

preciated amount)/n

Book value (Va)

Depreciation amount =(V(1-2/n)^a)
$3,200 $20,800.00

$2,773 $18,026.67

$2,404 $15,623.11

$2,083 $13,540.03

$1,805 $11,734.69

$1,565 $10,170.07

$1,356 $8,814.06

$1,175 $7,638.85

$1,019 $6,620.34

$883 $5,737.63
Name of equipment Distillation Column
Original Value 500000
Salvage Value 12000
Year (n) 10
a 5
Solution:- Straight line method
v= $500,000.00 Rs
vs = $12,000 Rs
n= 10 year
d= V-Vs/n $48,800.00
Asset value after 5 years = Va, where a=
Va = V - ad $256,000.00 Rs

By using double declining balance method

d= Annual depreciation
n= Service life

d= 2 (undepreciated amount)/n
undepreciated amount = 100
For year every year
Year Dpreciation (%)
1 d= 20 %
80
2 d= 16 %
64
3 d= 12.8 %
51.2
4 d= 10.24 %
40.96
5 d= 8.192 %
 5

preciated amount)/n

Book value (Va)

Depreciation amount =(V(1-2/n)^a)
$100,000 $400,000.00

$80,000 $320,000.00

$64,000 $256,000.00

$51,200 $204,800.00

$40,960 $163,840.00
Name of equipment Reactor
Original Value 470000
Salvage Value 20000
Year (n) 20
a 15
Solution:- Straight line method
v= $470,000.00 Rs
vs = $20,000 Rs
n= 20 year
d= V-Vs/n $22,500.00
Asset value after 5 years = Va, where a=
Va = V - ad $132,500.00 Rs

By using double declining balance method

d= Annual depreciation
n= Service life

d= 2 (undepreciated amount)/n
undepreciated amount = 100
For year every year
Year Dpreciation (%)
1 d= 10 %
90
2 d= 9 %
81
3 d= 8.1 %
72.9
4 d= 7.29 %
65.61
5 d= 6.561 %
59.049
6 d= 5.9049 %
53.1441
7 d= 5.31441 %
47.82969
8 d= 4.782969 %
43.046721
9 d= 4.3046721 %
38.7420489
10 d= 3.87420489 %
34.86784401
11 d= 3.486784401 %
31.38105961
12 d= 3.138105961 %
28.24295365
13 d= 2.824295365 %
25.41865828
14 d= 2.541865828 %
22.87679245
15 d= 2.287679245 %
 15

preciated amount)/n

Book value (Va)

Depreciation amount =(V(1-2/n)^a)
$47,000 $423,000.00

$42,300 $380,700.00

$38,070 $342,630.00

$34,263 $308,367.00

$30,837 $277,530.30

$27,753 $249,777.27

$24,978 $224,799.54

$22,480 $202,319.59

$20,232 $182,087.63

$18,209 $163,878.87
$16,388 $147,490.98

$14,749 $132,741.88

$13,274 $119,467.69

$11,947 $107,520.92

$10,752 $96,768.83
Name of equipment Pump
Original Value 24000
Salvage Value 4000
Year (n) 10
a 4
Solution:- Straight line method
v= $24,000.00 Rs
vs = $4,000 Rs
n= 10 year
d= V-Vs/n $2,000.00
Asset value after 5 years = Va, where a= 4
Va = V - ad $16,000.00 Rs

By using double declining balance method

d= Annual depreciation
n= Service life

d= 2 (undepreciated amount)/n
undepreciated amount = 100
For year every year
Year Dpreciation (%)
1 d= 20 %
80
2 d= 16 %
64
3 d= 12.8 %
51.2
4 d= 10.24 %
 Book value (Va)
Depreciation
=(V(1-2/n)^a)
amount
$4,800 $19,200.00

$3,840 $15,360.00

$3,072 $12,288.00

$2,458 $9,830.40