To calculate the depreciation allowance using the diminishing value method, we need to determine the depreciation rate. However, since you have not specified the depreciation rate, I will assume a commonly used rate for vehicles, which is 20% per annum.
Here's how to calculate the depreciation allowance and the written down values for the years 1999 and 2000:
Year 1999:
- Purchase Date: August 1, 1999
- Cost of Truck: K380,000
- Depreciation Rate: 20%
Since the truck was purchased in the middle of the year, we will calculate the depreciation only for the months it was held in 1999. The depreciation period for 1999 is 5 months (August to December).
Depreciation for 1999:
\[ \text{Depreciation for 1999} = \text{Cost} \times \text{Depreciation Rate} \times \frac{\text{Months Held}}{12} \] \[ \text{Depreciation for 1999} = K380,000 \times 0.20 \times \frac{5}{12} = K380,000 \times 0.20 \times 0.41667 \approx K31,666.67 \]
Written Down Value at end of 1999:
\[ \text{Written Down Value} = \text{Cost} - \text{Depreciation} \] \[ \text{Written Down Value}_{1999} = K380,000 - K31,666.67 \approx K348,333.33 \]
Year 2000:
Depreciation for 2000:
Now, we will use the written down value from the end of 1999 to calculate the depreciation for the year 2000.
\[ \text{Depreciation for 2000} = \text{Written Down Value}_{1999} \times \text{Depreciation Rate} \] \[ \text{Depreciation for 2000} = K348,333.33 \times 0.20 = K69,666.67 \]
Written Down Value at end of 2000:
\[ \text{Written Down Value}{2000} = \text{Written Down Value}{1999} - \text{Depreciation for 2000} \] \[ \text{Written Down Value}_{2000} = K348,333.33 - K69,666.67 \approx K278,666.67 \]
Summary:
- Depreciation Allowance for 1999: K31,666.67
- Written Down Value at end of 1999: K348,333.33
- Depreciation Allowance for 2000: K69,666.67
- Written Down Value at end of 2000: K278,666.67
Please adjust the depreciation rate as necessary if a different rate applies.
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