Depreciation Schedule

   This week is about depreciation schedule. Depreciation schedule is a document usually used by companies to report their financial statement. They contain information on the type of assets the company is depreciating.

Depreciation Schedule aims to:

                1. relate the total and average years in depreciation in the preparation of depreciation schedule; and

                2. construct the depreciation schedule.

               

       Depreciation is the lost in value of physical assets through its use. The yearly deposits into the depreciation fund are called depreciation charges. The depreciation fund is the portions of a given amount at the end of its useful life or the difference between the original cost of the asset and the sum in the depreciation fund is called the book value of the asset. At the end of the year.

The formula in making depreciation schedule is cost – scrap value = depreciation/number of hours

Here’s how you make a depreciation schedule :

Machine cost 20,000

Scrap 4000

Hours 40, 000

Subtract the cost (P20,000) with the scrap value of (P4000) and the answer is P 16,000. Divide the total 16,000 to the number of hours (P40,000) and you will get P0.40hr. in the chart you will put in the years category year 0-4. Why year 0-4? Because in the problem they are asking for 4 years of depreciation schedule.   Put the hours in hours in operation which is already given.  In depreciation charge multiply the hours in operation with the charge per operating hour which is 0.4hr. In amount depreciation fund you will add the amount depreciation in depreciation charge. To get the book value at end of year subtract it from depreciation charge. For example:

Book value at end of year     depreciation charge

20,000                                  -       4,000                          and you will get

16,000                                  -       3,600

12,400                                  -       4,800

7,600                                     -      4,000

That’s how you make a depreciation charges.

Checked by: Prof. Criscencio Paner

more info. http://panercris.sulit.com.ph/