Help with depreciation on fixed assets?

New Zealand Discussion in 'Exams and Studying' started by Georgia, Jun 25, 2018.

  1. Georgia


    Jun 25, 2018
    Likes Received:
    Hey guys,
    I'm a first year accounting student and looking for some help understanding a question in an assignment.

    A company purchased new fixed assets for $11,000 and had costs of $3,000 to install them and set them up. They will have a value of $2,000 at the end of two years and I am to workout out the depreciation expense using straight line and diminishing value methods.

    Am I right in thinking that the depreciable value is $6,000 (cost of asset less expenses and residual value) or is it actually $9,000 (cost of asset less residual value).

    Thanks in advance for any help.
    Georgia, Jun 25, 2018
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  2. Georgia

    Steve-LevelUp VIP Member

    Jul 18, 2016
    Likes Received:
    The $11k + $3k is the total asset value ($14k). A $2k resale value leaves $12k as a depreciable value.
    Steve-LevelUp, Jun 26, 2018
    ladyrider likes this.
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