9609 · 10.1.4
Practice and worked examples for 9609 Depreciation. Short previews only — attempt the full question in MarkScheme against the official scheme.
Machine purchased for $60 000. Residual value $6 000. Useful life 6 years.
Calculate annual depreciation and NBV after 3 years.
Annual depreciation = (60 000 − 6 000) ÷ 6 = $9 000 per year
Accumulated depreciation after 3 years = 3 × 9 000 = **
NBV = 60 000 − 27 000 = **
Apex Logistics bought a delivery van on 1 Jan 2023 for £35,000. It has a useful life of 4 years and an estimated residual value of £5,000. The company uses the straight-line method. Show the financial statement extracts for the year ended 31 December 2024.
Step 1: Calculate annual depreciation. Annual Depreciation = (Cost - Residual Value) / Useful Life = (£35,000 - £5,000) / 4 years = £30,000 / 4 = £7,500 per year
Step 2: Show extracts for the year ended 31 December 2024 (Year 2).
Statement of Profit or Loss (extract) For the year ended 31 December 2024 Expenses: Depreciation expense ... £7,500
Statement of Financial Position (extract) As at 31 December 2024 Non-Current Assets Vehicles at Cost ... £35,000 Less: Accumulated Depreciation ... (£15,000) Net Book Value ... £20,000
Working for Accumulated Depreciation: Year 1 (£7,500) + Year 2 (£7,500) = £15,000