Practice Depreciation Calculation For Year 1 (2.1) - Sum of the Years Digit Method

Practice: Depreciation Calculation for Year 1

Lesson 2.1Sum of the Years Digit Method

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6 sample questions

Question 1.
What does the sum of the years' digits method emphasize?
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Think about how depreciation is calculated.
Question 2.
Calculate the Year 1 depreciation using the double declining balance method for an asset with a book value of ₹7,600,000.
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Remember to apply 2/n, where n is the remaining useful life.
3Question 3.
Using SYD, Year 1 depreciation for an asset costing ₹8,200,000 is?
- ₹1,280,000
- ₹1,688,888
- ₹12,800,000
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Recall the formula used in SYD calculations.
4Question 4.
True or False: The double declining balance method considers salvage value when estimating depreciation.
- True
- False
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Consider how DDB operates compared to SYD.
Question 5.
An asset purchased for ₹50,000 has a salvage value of ₹5,000 and a recovery period of 5 years. Calculate Year 1 depreciation using both methods and discuss which option provides greater benefit.
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Calculate both and compare the deductions.
Question 6.
Explain why an accountant might switch from SYD to straight-line in the later years.
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Consider financial strategies and reporting impacts.

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