Coming back to Depreciation. Do you know what a reducing balance depreciation method is?
Watch Dr Accounting chapter 12 to learn more about the world of Accounting with us!
Welcome to Doctor Accounting chapter twelve. In this series, I would like to share with you how to compute the Reducing Balance Method.
For instance, the Cost of the Asset, let’s say the Lorry is about seventeen thousand and the Reducing Balance Rate is thirty-five percent. So year one, you will take thirty-five percent times by seventeen thousand, this will give you five thousand nine hundred fifty.
Now when come to year two, you need to take is the cost minus by the Depreciation, which will be the Net Book Value. So let me demonstrate, thirty-five percent times by seventeen thousand minus by five thousand nine hundred fifty, so this is the Net Book Value.
So the results will be three thousand eight hundred and sixty-eight. You will compute until the balance of the Assets is being reduced.
I hope that you find this series useful. I hope to see you in my next series chapter 13.