XYZ Co acquired a lorry on 1 April 20X3 at a cost of $7,500. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $1,500. XYZ Co charges depreciation on the straight line basis, with a proportionate charge in the period of acquisition.
What will the depreciation charge for the lorry be in XYZ Co ‘s accounting period to 31 August 20X3?
Answer
Depreciation charge =
[($7,500 – $1,500)/4 years] x (5 months /12 months) = $625