A company buys computers at a cost of 4 million. They expect to replace the computers at the end of 4 years. What annually rate of depreciation will be used if the computers are discarded at the end of 4 years (i.e you may assume that the computers have no resale value) ?
To find the annually rate of depreciation, we need to divide the cost of the computers by the number of years they are expected to last.
Depreciation per year = Cost of computers / Number of years
Depreciation per year = 4,000,000 / 4 = 1,000,000
Therefore, the annually rate of depreciation used for the computers is $1,000,000.
Write down the depreciated value of the computers year by year for the 4 years
Year 1: $4,000,000 - $1,000,000 = $3,000,000
Year 2: $3,000,000 - $1,000,000 = $2,000,000
Year 3: $2,000,000 - $1,000,000 = $1,000,000
Year 4: $1,000,000 - $1,000,000 = $0
To calculate the annual rate of depreciation, we need to divide the total depreciation by the number of years.
Since the computers are discarded at the end of 4 years and have no resale value, the total depreciation is the cost of the computers.
Given that the cost of the computers is 4 million, we can calculate the annual rate of depreciation as follows:
Annual rate of depreciation = Total depreciation / Number of years
Annual rate of depreciation = Cost of the computers / Number of years
Annual rate of depreciation = 4,000,000 / 4
Annual rate of depreciation = 1,000,000
Therefore, the annual rate of depreciation used for the computers is 1 million.
To calculate the annual rate of depreciation, we need to determine the total depreciation over 4 years and divide it by the initial cost of the computers.
Given that the cost of the computers is 4 million, and they will be replaced after 4 years with no resale value, we can conclude that the total depreciation over the 4 years will be equal to the initial cost, which is 4 million.
To find the annual rate of depreciation, we divide the total depreciation by the number of years. In this case, it is 4 million divided by 4 years, resulting in 1 million per year.
Therefore, the annual rate of depreciation for these computers is 1 million.