Depreciation problem

straight line method depriciation = 135000-5000=130000/10=13000

less: residual value                                                                               5000

                                                                                                              ---------------

                                                                                                                    8000

plus: from 5 yrs to 8 yrs is 3 yrs

therefore,first 5 yrs cube is 5^3                                                               125

                                                                                                             -----------------

                                                                      total                                        8125

                                                                                                              -----------------

Depreciation for first 5 years = (135000-5000)/10 = 13000 per year.

Therefore book value of the machine after five years is 1,35,000 - 5*13,000= 70,000

now the new useful life is 8 years, book value of machine is 70,000 and scrap value is 5,000.

hence depreciation for next year = (70,000-5,000)/8 = 65,000/8 = 8125