State which depreciation method will be the most appropriate in the case of each of the following
Question:
State which depreciation method will be the most appropriate in the case of each of the following assets and why. Also, indicate to what extent obsolescence will affect each of the assets.
(a) A delivery van used by a baker.
(b) A filing cabinet.
(c) A shop held on a 20 year lease.
(d) A plastic moulding machine to manufacture a new novelty – plastic fireguards. It is expected that these will be very popular next Christmas and that sales will continue for a year of two thereafter but at a very much lower level.
(e) Machine X. This machine is used as a standby when the normal machines are being maintained. Occasionally it is used to increase capacity when there is a glut of orders. Machine X is of an old type and is inefficient compared with new machines. When used on a full-time basis, the machine should last for approximately four years.
Step by Step Answer:
Frank Woods Business Accounting Volume 1
ISBN: 9780273681496
10th Edition
Authors: Frank Wood, Alan Sangster