UNIDAD EDUCATIVA BILINGÜE NUEVO MUNDO
                                                WORK SHEET
                                         FOR SOC 03 VER 10 12 12
                                                                                                                    GRADE
                                                                                                                  __________
NAME: ……………………………………                                     TEACHER: Alex A. / Verónica I.
GRADE: ……….          SECTION: …………….                     SUBJECT:
DATE: __/___/__                                          TYPE: Classwork


                                                                           Depreciation: using both methods

As part of its growth strategy, Neat Organization intends to purchase a number of fully-equipped vans to
transport vacationers from the airport to the city resorts as the cost of transport has increased rapidly in recent
years. After 7 years (the predicted useful life of the vans), the management hopes that they will have enough
residual value that can then be used towards purchasing a new fleet. The initial cost of the vans is $1,000,000.

Calculate the following (Show all your working):

a. straight-line depreciation for the first 7 years, considering that the experience of the financial dept. dictates
that the vans could be sold for at least 15% of their initial cost at the end of their life expectancy.

b. the depreciation at 20 % using the reducing balance method for the first 7 years of the vans.

c. Supposing the opportunity to sell some of the vans arises during the last quarter of the fourth year,
demonstrate which method would be more appropriate to be used.


                                                            Source: IB Business and Management HL Paper 2, November 2009, adaptations made.




   Aproved by:______________            Date: 02jan2013          P__        Num. Of copies: __                     Pages _ / _

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Depreciation Worksheet

  • 1. UNIDAD EDUCATIVA BILINGÜE NUEVO MUNDO WORK SHEET FOR SOC 03 VER 10 12 12 GRADE __________ NAME: …………………………………… TEACHER: Alex A. / Verónica I. GRADE: ………. SECTION: ……………. SUBJECT: DATE: __/___/__ TYPE: Classwork Depreciation: using both methods As part of its growth strategy, Neat Organization intends to purchase a number of fully-equipped vans to transport vacationers from the airport to the city resorts as the cost of transport has increased rapidly in recent years. After 7 years (the predicted useful life of the vans), the management hopes that they will have enough residual value that can then be used towards purchasing a new fleet. The initial cost of the vans is $1,000,000. Calculate the following (Show all your working): a. straight-line depreciation for the first 7 years, considering that the experience of the financial dept. dictates that the vans could be sold for at least 15% of their initial cost at the end of their life expectancy. b. the depreciation at 20 % using the reducing balance method for the first 7 years of the vans. c. Supposing the opportunity to sell some of the vans arises during the last quarter of the fourth year, demonstrate which method would be more appropriate to be used. Source: IB Business and Management HL Paper 2, November 2009, adaptations made. Aproved by:______________ Date: 02jan2013 P__ Num. Of copies: __ Pages _ / _