A Accounting

Depreciation for lorry ( video below)

XYZ Co acquired a lorry on 1 April 20X3 at a cost of $7,500. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $1,500. XYZ Co charges depreciation on the straight line basis, with a proportionate charge in the period of acquisition.

What will the depreciation charge for the lorry be in XYZ Co ‘s accounting period to 31 August 20X3?

Answer

Depreciation charge =

[($7,500 – $1,500)/4 years] x (5 months /12 months) = $625


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