Hi all. I have been given the following information and need to work out the percentage that has been applied for depreciation using the reducing balance method.
Original cost of vehicle: £12,000 Estimated lifespan: 4 years Estimated resell value: £4,000
What percentage to the nearest whole number will be used each year?
I found this formula but, it being nearly 30 years since I took O-Level Maths, don't understand the last bit
Thanks for having a go, Rhianrach. The correct answer is actually 24% but I've no idea how to arrive at that figure. David Cox's Business Accounts gives a formula that uses something called a "fourth root". The fact that I had to google this term speaks volumes about my maths capabilities. I'm sure I knew this at one time ... many years ago.
Hehe I was good at maths at school, but we're talking twenty odd years ago now so I'm in the same boat as you. The thing is I'm half certain that this is explained as part of the AAT, I shall go and have a look whilst my kids are out buying even more Build a Bear things.
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Thanks both. The ^ symbol means "raised to the power of" and the tick thingy means root as in square root. Can't quite figure out how I do the calculations using a normal calculator though. I found a website called "Maths is Fun" (definitely not my recollection) which explains it, just not in simple enough terms for this dumpling:
Maths is fun is an oxymoron by my reckoning, unless you're a complete dork . I knew the square root symbol, and now you mention the power off symbol it all comes flooding back. I don't think you will ever do it on a normal calculater in one hit to be fair, or maybe that's just my 99p asda job that fails so enormously.
try a Casio fx-85ES (both Tesco and Sainsbury's stock them).
personally I hate it but it's great for things like this (my favorites are the Xerox XRX-250 and staples 550).
I only bought the Casio becuse the learning curve formulae uses logarithms which really does make it impossible on any of my desktops.
I keep finding myself on that Maths is fun website when helping my son with my son with his homework.... Give me a complex accounting problem over trying to get my head around the simplest shapes anyday!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.