To compute DB (depreciation base) and DE (depreciation expense) for tax year ending sene 30, 2006 and 2008, we need to calculate the accumulated depreciation for each year.
For tax year ending sene 30, 2006:
DB: Total cost of plant assets purchased before sene 30, 2006
= 16,000 + 6,000 + 7,000
= 29,000
DE: Accumulated Depreciation on plant assets purchased before sene 30, 2006
= (DB / Useful Life) x (Number of months in service / 12 months)
= (29,000 / 5 years) x (12 months / 12 months)
= 5,800
For tax year ending sene 30, 2008:
DB: Total cost of plant assets purchased before sene 30, 2008
= 29,000 + 3,500
= 32,500
DE: Accumulated Depreciation on plant assets purchased before sene 30, 2008
= (DB / Useful Life) x (Number of months in service / 12 months)
= (32,500 / 5 years) x (12 months / 12 months)
= 6,500
So, for tax year ending sene 30, 2006, the DB is 29,000 and the DE is 5,800.
For tax year ending sene 30, 2008, the DB is 32,500 and the DE is 6,500.
Assume ABC spare parts PLC uses the Tax year Hamle 1 to sene 30 and has the following plant assets : computers , information system , software and data storage Date of purchase and Acquisition yekatit 10 , 2006 16,000 Ginbot 01 , 2006 6,000 Nehase 07 , 2006 7,000 Tahsas 19 , 2007 3,500 Instruction : compute DB and DE for tax year Ending sene 30 , 2006 and 2008 assuming that ABC spare parts PLC . Sold computer at Birr 3,000 on Megabit 23 , 2006.
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