# Exercise 2) Depreciation: The following data for a machinery is available: Purchase price (incl.

Exercise 2) Depreciation:The following data for a machinery is available:Purchase price (incl. 20%VAT) 360 000 EURSalvage value (excl VAT) 10 000 EURuseful life 7 years(=estimated service life)production capacity 580 000 hours1st year: production (2006) 120 000 hours2nd year: production (2007) 160 000 hours3rd year: production (2008) 130 000 hours4th year: production (2009) 80 000 hours5th year: production (2010) 50 000 hours6th year: production (2011) 40 000 hours7th year: production (2012) 30 000 hoursa) Calculate the straight-line depreciation. (straight-line method)b) Calculate the depreciation based on the activity method.c) What other depreciation methods do you know?d) Calculate the depreciation for 2006 and the book value (31.12.2006) in accordance with the Austrian (taxation) regulations (straight-line) if the machinery has been purchased at 30 May 2006.e) Calculate the depreciation for 2006 and the book value (31.12.2006) in accordance with the Austrian (taxation) regulations (straight line) if the machinery has been purchased at 5 August 2006.

Answera. Straight LineDepreciation(EUR) = Year2006200720082009201020112012 ( Cost – Salvage Value)/ Yearslife( 360000-10000)/7Cum. BookDepDepValue3100050000 50000 010000 26000…

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