A firm purchased a 5 years' lease for $40,000 on first January. It decides to write off depreciation on the annuity method. Presuming the rate of interest to be 5% per annum.
Show the lease account for the first 3 years. Calculations are to be made to the nearest dollar.
Amount required to write off $1 by the annuity method.
According to the annuity table given above, the annual charge for depreciation reckoning interest at 5 percent p.a. would be:
230975 × 40,000 = $9,239
|Debit Side||Credit Side|
|1st Year||1st Year|
|Jan. 1||To Cash||40,000||Dec. 31||By Depreciation||9,239|
|Dec. 31||To Interest||2,000||By Balance c/d||32,761|
|Even at 11.30 at night, burning midnight oil, I was still perusing my Actuarial books bought in 1960s.|
clock midnight. Go to bed !!
My wife shrieked !!
No Darling !!
I want to recall and understand at least something
before 4th August 2016.