9 Chapter Q&A

    • Q&A1


      On 1 January 2013 I got a 10 million Tugrik car. Today is the settlement date (December 31, 2013), and if you depreciate the vehicle, how much will it cost depreciation?

      The useful life of this vehicle is 10 years, the residual value is 10% of the acquisition price and is calculated by the straight-line method.



      In this case, we will calculate the depreciation expenses for one year because it will be settled just one year from the acquisition date of the vehicle concerned. In addition, to calculate by the straight-line method, depreciation expenses for this year can be obtained by using the following formula.

      Depreciation expenses = (acquisition price - salvage value) ÷ useful life

      By substituting the corresponding number into the above calculation formula,

      (10,000,000 - 1,000,000) ÷ 10 = 900,000

      . Therefore, the depreciation expenses for this term will be 900,000 Tugrik.