An item purchases for K55000 depreciates at a flat rate of 7% each year. Calculate the amount the item would depreciate each year.
To calculate the amount the item would depreciate each year, we need to multiply the initial cost of the item by the depreciation rate of 7%.
Depreciation amount = K55000 * 7% = K55000 * 0.07 = K3850
Therefore, the item would depreciate by K3850 each year.
Calculate the book value of the item after 8 years.
Use the formula:
Book Value after n years = P - n × (Pr)/100.
Where:
P is the purchased price.
n is the number of terms or years.
r is the rate.
Using the formula provided:
Book Value after 8 years = K55000 - 8 x (K55000 x 7)/100
Book Value after 8 years = K55000 - 8 x (K3850)
Book Value after 8 years = K55000 - K30800
Book Value after 8 years = K24200
Therefore, the book value of the item after 8 years would be K24200.
Calculate the scrap value of the item if it has a useful life of 13 years.
Use the formula:
Scrap value = P - n × (Pr)/100.
Where:
P is the purchased price.
n is the number of terms or years.
r is the rate
Given that the useful life of the item is 13 years, we can use the formula provided:
Scrap Value = K55000 - 13 x (K55000 x 7)/100
Scrap Value = K55000 - 13 x (K3850)
Scrap Value = K55000 - K50050
Scrap Value = K4950
Therefore, the scrap value of the item after 13 years would be K4950.