CIVECON Reviewer

Examination no. 3

Questionnaire:

1. A certain equipment costs 5,000 pesos and it has an estimated life of 10 years with a salvage
value of 100 pesos. What is the book value after 7 years using straight line method?

2. A broadcasting corporation purchased equipment worth Php 55,000 and paid Php 1,500 for
freight and delivery charges to the site. The equipment has a normal life of 10 years with a
trade-in value of Php 5,000 against the purchase of new equipment at the end of life.
Tabulate the yearly depreciation, accumulated depreciation and the book value for the first
4 years using the following:
a. Declining balance method
b. Double declining balance method

3. The following estimates have been made for a certain equipment item at the end of year
40: Installed cost=Php 130,000; Salvage value= Php 18,000
Find the BV (Book Value) at age 10 years by the following methods:
a. SLM (Straight Line Method)
b. SYD (Sum of Years Digit Method)
c. DBM (Declining Balance Method)
c. DDB (Double Declining Balance Method)
Answer sheet:

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Solution for number 1
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5000100
= = 490
10
Dn = 7(490) = 3430
BV7 = 5000 3430

Answer: BV7 = Php 1,570

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Solution for number 2
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40 5000
a. = 1 56000 = 0.2153

Year BVi dn Dn BVf

1 56,500 12164.45 12,164.45 44,335.55
2 44,335.55 9,545.44 21,709.89 34,790.11
3 34790.11 7,490.31 29,200.20 27,299.80
4 27,299.80 5,877.65 35,077.85 21,422.15
k Depreciation Factor
BVi Initial Book Value
dn First Depreciation Value
Dn dn + Previous dn
BVf Final Book Value
2
b. k = 10 = 0.2

Year BVi dn Dn BVf

1 56,500 11,300 11,300 45,200
2 45,200 9,040 20,340 36,160
3 36,160 7,232 27,572 28,928
4 28,928 5,785.6 33,357.6 23,142.4
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Solution for number 3
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130000 18000
a. BV10 = 130000 10 ( ) = P 102,000
40

2(40) 10+1) (10)

b. BV10 =130000 (13000018000)( ( ) =Php 81,512.20
40(40+1)

40 18000
c. k=1 130000 = 0.0482
BV10 = 130000(10.0482)10 = Php 79,323.22
2
d. k = 40 = 0.05
BV10 = 130000(10.05)10 = Php 77,835.80