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Satine Enterprise Ltd.
a) Reducing balance method:
Year
Depreciation
Net Book Value
0
$25,000
1
$8,750 ($25,000 x 35%)
$16,250
2
$5688 ($16,250 x 35%)
$10,563
b) Straight line method: Annualised depreciation = ($25,000 - $2,900) / 5 years = $4,420
4420
$20,580
$16,160
Therefore, total depreciation = $8,840
c) Students should show their working out (which could include answers taken from Questions 3.5.6a and 3.5.6b.
Method
Reducing balance
$6,865
Straight line
$11,740
d) Reducing Balance
Hence, the reducing balance method depreciates the NBV of the car by a greater amount in this time period
Define master budget
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