Machinery Services

Cost of asset, 2 January,

20X1
Estimated residual value

Estimated useful life

Kilometres per year 1
Kilometres per year 2
Kilometres per year 3
Kilometres per year 4
Kilometres per year 5
Kilometres per year 6
Total kilometres over life
Cost per kilometre
a)
Machinery Services
Straight-Line Depreciation Schedule
Depreciation for the year
Depreciat Deprecia Depreciat Accumulat Asset
Asset ion ble ion ed Carrying
Depreciati
Date Cost Rate Cost Amount on Amount
01-02-20X1

31-12-20X1

31-12-20X2
31-12-20X3
31-12-20X4
31-12-20X5
31-12-20X6

Machinery Services
Units-of-Production Depreciation Schedule
Depreciation for the year
Depreciati Number Accumulat
Asset on of Depreciati ed Asset
Cost Per Kilometr on Depreciati Carrying
Date
Kilometre es Amount on Amount
01-02-20X1
31-12-20X1
31-12-20X2
31-12-20X3
31-12-20X4
31-12-20X5

Template Page 1
31-12-20X6
Machinery Services
Reducing-Balance Depreciation Schedule
Depreciation for the year
Accumulat
Asset Depreciati Asset
Asset RB ed
Book on Carrying
Cost Rate Depreciati
Date Value Amount Amount
on
01-02-20X1
31-12-20X1
31-12-20X2
31-12-20X3
31-12-20X4
31-12-20X5
31-12-20X6
b)

Depreciation method that maximises first year income is =>

Depreciation method that maximises first year cash flow =>

Minimise
Maximis s
es Income
Reporte Tax
d Payment
c)
Income s
Comparison of net income for first year: SL RB
Cash provided by operations before income tax
Depreciation expense
Income before tax
Income tax expense (30%)
Net profit
Net profit advantage of SL over
RB

Cash-flow analysis for the first year:

Cash provided by operations before income tax
Income tax expense
Cash provided by operations
Cash-flow advantage of RB over SL

Template Page 2