DEPRECIATION BY 150%

Declining Balance
Chapter 4 - Depreciation
 150% Declining Balance
Same as the declining balance method in that
a fixed percentage.

Multiplied to the straight line rate

Ignores residual value

 150% Declining Balance
Example,

Sweetie Co. acquired an aeroplane in Jan 2013

for P75,000,000. The asset has an estimated
useful life of 10 years computed by 150%
declining method. Residual value is P900,000

Compute for December 2014 depreciation

 150% Declining Balance
Solution:
Cost 75,000,000
Date of acquisition Jan 1
Useful life 10 years
Straight line rate (100% / 10 years) 10%
Declining rate (150% x 10%) 15%

Compute for December 2014 depreciation

Straight line rate (100% / 10 years) = 10%
Fixed rate (150% x 10%) = 15%

Depreciation for 1st year

(75,000,000 x 15%) = 11,250,000
Carrying amount
75,000,000 11,250,000 = 63,750,000

Depreciation for 2nd year

(63,750,000 x 15%) = 9,562,500
 150% Declining Balance
Another example,

Sweetie Co. acquired an aeroplane in June 30,

2013 for P75,000,000. The asset has an
estimated useful life of 10 years computed by
150% declining method. Residual value is
P900,000.

Compute for the year end depreciation

Solution:
Cost 75,000,000
Useful life 10 years
Date of acquisition June 30
Straight line rate (100% / 10 years) 10%
Declining rate (150% x 10%) 15%

Depreciation for 2013

(15% x 75,000,000) = 11,250,000
June 30, 2013 Dec 30 2013
= 11,250,000 x 6 / 12months = 5,625,000
 SOLVE
1. Torres company purchased a machinery for
1,200,000. Estimated useful life is 5 years.
What is the depreciation using 150%
declining-balance method.
 SOLVE
1. Torres company purchased a machinery for
1,200,000. Estimated useful life is 5 years.
What is the depreciation using 150%
declining-balance method.

Straight line rate (100% / 5 years) = 20%

Fixed rate (150% x 20%) = 30%
Depreciation expense (1,200,000 x 30%)
= P360,000
 SOLVE
2. Sarmiento Company purchased an equipment
costing 500,000. It has an estimated useful life
of 5 years. What is the cost of depreciation?
 SOLVE
2. Sarmiento Company purchased an equipment
costing 500,000. It has an estimated useful life
of 5 years. What is the cost of depreciation?

Straight line rate (100% / 5 years) = 20%

Fixed rate (150% x 20%) = 30%
Depreciation expense (500,000 x 30%)
= 150,000
 SOLVE
3. Tanyag Company purchased an equipment for
340,000. The useful life is 10 years. How much
was the cost of depreciation on the 2nd year?
Straight line rate (100% / 10 years) = 10%
Fixed rate (150% x 10%) = 15%

Depreciation for 1st year

(340,000 x 15%) = 51,000
Carrying amount
340,000 51,000 = 289,000
Depreciation for 2nd year
(289,000 x 15%) = 43,350
 SOLVE
4. Evangelista Company purchased a machinery
costing 900,000. The estimated useful life is 15
years. What will be the depreciation cost for
the year end?
 SOLVE
4. Evangelista Company purchased a machinery
costing 900,000. The estimated useful life is 15
years. What will be the depreciation cost for
the year end?

Straight line rate (100% / 15 years) = 6.66%

Fixed rate (150% x 6.66%) = 10%
Depreciation expense (900,000 x 10%)
= 90,000
 SOLVE
5. ST Company bought a machine for production
costing 500,000. The useful life of the
following machine is 5 years. How much will
be the depreciation at the second year?
Straight line rate (100% / 5 years) = 20%
Fixed rate (150% x 20%) = 30%

Depreciation for 1st year

(500,000 x 30%) = 150,000
Carrying amount
500,000 150,000 = 350,000
Depreciation for 2nd year
(350,000 x 15%) = 105,000
 SOLVE
6. XYZ Company acquired an equipment for
850,000 on January 1, 2015. The estimated
end of the equipment is at 2020. What is the
cost of depreciation of the equipment on
December 31, 2017?
Straight line rate (100% / 5 years) = 20%
Fixed rate (150% x 20%) = 30%

Depreciation for 1st year

(850,000 x 30%) = 255,000
Carrying amount
850,000 150,000 = 595,000
Depreciation for 2nd year
(595,000 x 30%) = 178,500
Carrying amount
595,000 178,500 = 416,500
Depreciation for 3rd year
(416,500 x 30%) = 124,950
 SOLVE
7. Caballero Company purchased a machine
costing 500,000 on January 1,2015. The
estimated life of the equipment is 10 years.
How much is the depreciation cost on 2015?
 SOLVE
7. Caballero Company purchased a machine
costing 500,000 on January 1,2015. The
estimated life of the equipment is 10 years.
How much is the depreciation cost on 2015?

Straight line rate (100% / 10 years) = 10%

Fixed rate (150% x 10%) = 15%
Depreciation expense (500,000 x 15%)
= 75,000
 SOLVE
8. LOL Company purchased an equipment for
1,500,000 on Jan 2015. The equipment will be
fully depreciated on before Jan 2025. What
will be the depreciation on 2016?
Straight line rate (100% / 10 years) = 10%
Fixed rate (150% x 10%) = 15%

Depreciation for 1st year

(1,500,000 x 15%) = 225,000
Carrying amount
1,500,000 225,000 = 1,275,000
Depreciation for 2nd year
(1,275,000 x 15%) = 191,250
 SOLVE
9. Dota Corporation acquired an equipment for
600,000 on June 30,2010. The estimated life
of the equipment is 10 years. How much will
be depreciated on December 31, 2010?
 SOLVE
9. Dota Corporation acquired an equipment for
600,000 on June 30,2010. The estimated life
of the equipment is 10 years. How much will
be depreciated on December 31, 2010?

Straight line rate (100% / 10 years) = 10%

Fixed rate (150% x 10%) = 15%
Depreciation expense (600,000 x 15%)
= 90,000 x 6 /12 months
= 45,000
 SOLVE
10. SS Company purchased a machinery for
1,400,000 on September 1,2015. The
estimated life of the machinery is 15 years.
What will be the cost of depreciation 2016 at
year end?
Straight line rate (100% / 15 years) = 6.66%
Fixed rate (150% x 6.66%) = 10%

Depreciation for 1st year

(1,400,000 x 10%) = 140,000
Carrying amount
1,400,000 140,000 = 1,260,000
Depreciation for 2nd year
(1,260,000 x 10%) = 126,000
September 1, 2016 Dec 30, 2016
Add: (126,000 x 4 /12mos.) = _42,000
168,000
 END OF
DISCUSSION