How do you calculate annual depreciation using straight line method @ 15% when no residual value is given?

Question

can someone show me how to do this please.

Asset Register 2006 (Depreciated quarterly)

Example:

Asset: Equipment

Purchase Date 26-10-04

Cost $3182 exc gst

Str8 line depn 15%.

Calculate annual depn as at 30-6-2007

Also what is 15%, 25% and 20% in str8 line method in years.

If someone could assist me it would greatly appreciated and i can then do the rest.

Answer 1

15% means you depreciation over 100/15 or 6.67 yrs (or 80 months). 20% means 5 yrs and so on.

Did you want the annual depreciation for the year ended 30.6.2007? If so, it would just be $3,182 x 0.15 = $477.30.

If you want the accumulated depreciation as at 30.6.2007, it would be $3,182 x 32/80 = $1,272.80 (32 months, ignoring the few days in Oct. 04)

Answer 2

Depreciation is a term used in accounting, economics and finance to spread the cost of an asset over the span of several years.

In simple words we can say that depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, technological outdating or obsolescence, depletion or other such factors.

In accounting, depreciation is a term used to describe any method of attributing the historical or purchase cost of an asset across its useful life, roughly corresponding to normal wear and tear.[1] It is of most use when dealing with assets of a short, fixed service life, and which is an example of applying the matching principle as per generally accepted accounting principles. Depreciation in accounting is often mistakenly seen as a basis for recognizing impairment of an asset, but unexpected changes in value, where seen as significant enough to account for, are handled through write-downs or similar techniques which adjust the book value of the asset to reflect its current value. Therefore, it is important to recognize that depreciation, when used as a technical accounting term, is the allocation of the historical cost of an asset across time periods when the asset is employed to generate revenues. This process of cost allocation has little or no direct relationship to the market value or current selling price of the asset, it is simply the recognition that a portion of the asset's cost--the portion that will never be recuperated through re-sale or disposal of the asset--was "used up" in the generation of revenues for that time period.

The use of depreciation affects the financial statements and in some countries the taxes of companies and individuals. The recording of depreciation will cause an expense to be recognized, thereby lowering stated profits on the income statement, while the net value of the asset (the portion of the historical cost of the asset that remains to provide future value to the company) will decline on the balance sheet. Depreciation reported for accounting and tax purposes may differ substantially.