Question

How to calculate depreciation when you have provided with value at cost, accumulated depreciation and carrying amount?

Answer 1

To calculate depreciation when you are given the value at cost, accumulated depreciation, and carrying amount, you can follow these steps:

1. Subtract the accumulated depreciation from the value at cost to determine the total amount of depreciation that has been recorded so far.
Depreciation = Value at cost - Accumulated depreciation

2. Subtract the total depreciation from the value at cost to determine the remaining book value of the asset.
Remaining book value = Value at cost - Total depreciation

3. Compare the remaining book value with the carrying amount provided. If the remaining book value matches the carrying amount, then there is no need for further depreciation calculations.

4. If the remaining book value does not match the carrying amount, you will need to calculate and record additional depreciation to bring the carrying amount in line with the remaining book value. You can use the following formula to calculate additional depreciation:
Additional depreciation = Carrying amount - Remaining book value

By following these steps, you can accurately calculate depreciation and ensure that the carrying amount of the asset reflects its true value based on the accumulated depreciation recorded.