Depreciation

acompanymusthave the equipment, and value of capital always diferrent year to year. So, in this meeting we talk about this. Example, a car must have depreciation Depreciation methods generally can be grouped on four parts, namely: 1. 1. Average method, the method is devided over three parts, namely. 1. a. straight line method Depreciation = (Purchase price - salvage value / economic life) example : An engine plant has a purchase price of Rp. 55,000,000.00. Have estimated economic life of 5 years with a residual value of Rp 5.000.000, -. Then the depreciation per year is depreciation = (Rp. 55.000.000,00 Rp. 5.000.000,00)/5 = Rp. 10.000.000,00 b. (service hours method) Depreciation per hour = (purchase price, residual value of assets) / total hours worked economically Depreciation per year = the depreciation rate per hour X hours of use example : An aircraft purchased at a price of Rp. 100,000,000.00. Expected to provide aviation services 10 000 flying hours services. In the year 2008 is estimated to be used for 1,500 hours of flying. Then calculated the depreciation for the year 2008: Depreciation per hour = Rp. 100,000,000, -/10.000 = Rp. 10.000, Depreciation in 2008 = Rp. 10000.00 x 1500 = Rp. 15.000.000,-

c. (Product Units Method) Depreciation = purchase price- residual value number of units over the economic life of the machine Depreciation per year = number of production a year X depreciation per unit Depreciation per unit = (purchase price, residual value) estimated number of production Example : A factory machine has a purchase price of Rp 50,000,000.00 is estimated to have the economic life of 5 years with a residual value of Rp 5,000,000.00 and is expected to result in the production unit for 5 years as follows: 1st year = 14,000 units The second year = 12,000 units 3rd year = 10,000 units 4th year = 8000 units Year-to-5 = 6000 units The amount of shrinkage is : Depreciation per unit = (Rp.50.000.000,00 Rp. 5.000.000,00)/50.000= Rp. 900 depreciation per year :

year 1 2 3 4 5

production unit 14.000 12.000 10.000 8.000 6.000

pare Rp. 900 Rp. 900 Rp. 900 Rp. 900 Rp. 900

depreciation Rp 12.600.000,00 Rp 10.800.000,00 Rp 9.000.000,00 Rp 7.200.000,00 Rp. 5.400.000,00

Depreciation schedules are Over 5 Years: YearThe annual amount of end depreciation depreciation 0 1 12.600.000 12.600.000 2 10.800.000 23.400.000 3 9.000.000 32.400.000 4 7.200.000 39.600.000 5 5.400.000 45.000.000

book value 50.000.000 37.400.000 26.600.000 17.600.000 10.400.000 5.000.000

2 a. Annuity method purchase price of a machine Rp. 50.000.000 with an estimated salvage value of Rp. 10.000.000 and economic life set for 5 years. The effective interest rate calculated at 18% per year. How big is the annual depreciation to be done by using the annuity method? answer : The purchase price of assets = Rp.50.000.000 economic life of assets = 5 tahun residual value = Rp.10.000.000 i =18% to determine the depreciated value of the assets should be calculated present value of the scrap value / residual value using the following formula: Depreciation = scrap value (1 + i)n D = 10.000.000 (1+0.18)-5 D = 10.000.000 (0,43710922) = 4.371.092 present assets are depreciated An = purchase price of assets - depreciation 50.000.000 4.371.092= Rp. 45.628.908; An = R. [ (1 (1 + i)-n )] I Depreciation per year is calculated as follows: R = 45.628.908 [ 0,18 ] -5 (1 (1+0.18) R = 45.628.908 (0.31977784) R = Rp. 14.591.114 b. Sinking fund method unknown:

n= 5 year i = 18% B (original cost) = Rp 50.000.000 S (scrape value) = Rp 10.000.000 Sn = B S = Rp. 50.000.000 10.000.000= Rp. 40.000.000 R = Sn [ i ] {(1+i) 1 ) R = 40.000.000 [ 0.18 ] {1+0.18)5 -1) R = Rp.40.000.000 (0.139777837)= 5.591.113 Thus, the amount of depreciation in one year Rp. 5.591.113 3 a. method the number of annual rate For example, a cracker company purchased equipment for Rp. 15 million; have economic life for 6 years, and the calculated residual value of Rp. 3,000,000; the amount of depreciation in each year can be calculated as follows : The annual rate: 1 + 2 + 3 + 4 + 5 + 6 = 21 depreciated value of assets : (B S) = 15.000.000 3.000.000 = Rp. 12.000.000 Depreciation each year 1year = 6/21 x Rp. 12.000.000 = Rp. 3.428.571,4 2year = 5/21 x Rp. 12.000.000 = Rp. 2.857.142,9 3year = 4/21 x Rp. 12.000.000 = Rp. 2.285.714,3 4year = 3/21 x Rp. 12.000.000 = Rp. 1.171.285,7 5year = 2/21 x Rp. 12.000.000 = Rp. 1.142.857,1 6year= 1/21 x Rp. 12.000.000 = Rp. 571.428,57 Rp. 12.000.000 b. depreciation method the average percentage If the asset purchase price of Rp. 10 million dollars in economic life for 5 years, the annual depreciation amount is equal to 100% / 5 = 20%. To purchase a new asset at the time will come yanga with higher prices, either as a result of the inflation rate due to changes in technology and the average percentage of depreciation increased by multiples of two. Based on this description, the amount of depreciation each year is calculated as : Tahun I = 40% x Rp. 10.000.000 = Rp. 4.000.000 Rp. 10.000.000 Rp. 4.000.000 = Rp. 6.000.000 Tahun II = 40% x Rp. 6.000.000 = Rp. 2.400.000 = Rp. 6.000.000 Rp. 2.400.000 =Rp. 3.600.000 Tahun III = 40% x Rp. 3.600.000 = Rp. 1.440.000 = Rp. 3.600.000 Rp. 1. 440.000 = Rp. 2.160.000 Tahun IV = 40% x Rp. 2.160.000 = Rp. 864.000 = Rp. 2.160.000 Rp. 864.000 = Rp. 1.296.000 Tahun V = 40% x Rp. 1.296.000 = Rp. 518.400 Rp. 1. 296.000 Rp. 518.400 = Rp. 777.600

4. Composite depreciation method Example: a company has three pieces of machinery, machine I purchase price of Rp. 10 million; machine II Rp. 7 million; and III machine purchase price is Rp. 5 million; economic life of the machine I, II, and III each 5 years, 4 years, and 10 years. Scarp value of the three machines are assumed to Rp. 2.000.000;, Rp. 1,000,000; and a third engine Rp. 400 000 Mac Purcase price (Rp) Scar value hine (Rp) Depreciation life of the (Rp) engine (yaer) 8.000.000 5 6.000.000 4 4.600.000 10 18.000.000 19 Year depreciation

A 10.000.000 2.000.000 1.600.000 B 7.000.000 1.000.000 1.500.000 C 5.000.000 400.000 460.000 Jum 22.000.000 3.400.0000 3.560.000 lah Amount of depreciation in one year is calculated based on fixed depreciation are as follows : percentage of depreciation = the amount of annual depreciation amount of the purchase price of assets = 3.560.000 = 0,161818181=16,18% 22.000.000 Conducted on the amount of depreciation each year is as follows : 0,161818181 x 22.000.000 = 3.600.000 The length of time for the depreciation is calculated as follows: 18.000.000 = 5 year 2 month 3.600.000