The slides contain four basic methods to calculate depreciation of tangible assets.

1. DEPRECIATION
by
Riri Ariyanty, MM.

2. Methods of Depreciating
1. Straight line method
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛/𝑌𝑒𝑎𝑟 =
𝐴𝑠𝑠𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 − 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 𝑣𝑎𝑙𝑢𝑒
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑒𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑙𝑖𝑓𝑒
2. Sum of the years digit method
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛/𝑌𝑒𝑎𝑟 = 𝑇𝑎𝑟𝑖𝑓𝑓 × (𝐴𝑠𝑠𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 − 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 𝑣𝑎𝑙𝑢𝑒)
3. Double declining balance method
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
𝑌𝑒𝑎𝑟
=
100%
𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒𝑑 𝑒𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑙𝑖𝑓𝑒
× 2 × (𝐴𝑠𝑠𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 − 𝑅𝑒𝑠𝑖𝑑𝑢𝑎𝑙 𝑣𝑎𝑙𝑢𝑒)
4. Production method
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

3. Exercise
1. A company has asset value of IDR 1.000.000,- with 5 year estimated economic
life and 10% residual value. Calculate the depreciation per year by using
straight line method, Sum of the years digit method, and double declining
method!
Apply the production method to calculate the depreciation assuming the
estimated production during 5 years are 40.000 units, 25.000 units, 20.000
units, 10.000 units, and 5.000 unit!
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

4. Exercise No. 1
Straight Line Method
–
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
𝑌𝑒𝑎𝑟
=
𝐼𝐷𝑅 1.000.000 −𝐼𝐷𝑅 100.000
5 𝑦𝑒𝑎𝑟𝑠
= 𝐼𝐷𝑅180.000/𝑦𝑒𝑎𝑟
Year- Depreciation/Year Accumulated
Depreciation
Residual Value
1 IDR 180.000 IDR 180.000 IDR 820.000
2 IDR 180.000 IDR 360.000 IDR 640.000
3 IDR 180.000 IDR 540.000 IDR 460.000
4 IDR 180.000 IDR 720.000 IDR 280.000
5 IDR 180.000 IDR 900.000 IDR 100.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

5. Exercise No. 1
Sum of the Years Digit Method
Year- Tariff x Basic of Depreciation Depreciation/
Year
Accumulated
Depreciation
Residual Value
1 5
15
× (IDR 1000.000 − IDR 100.000)
IDR 300.000 IDR 300.000 IDR 700.000
2 4
15
× (IDR1000.000 − IDR100.000)
IDR 240.000 IDR 540.000 IDR 460.000
3 3
15
× (IDR 1000.000 − IDR 100.000)
IDR 180.000 IDR 720.000 IDR 280.000
4 2
15
× (IDR 1000.000 − IDR 100.000)
IDR 120.000 IDR 840.000 IDR 160.000
5 1
15
× (IDR 1000.000 − IDR100.000)
IDR 60.000 IDR 900.000 IDR 100.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

6. Exercise No. 1
Double Declining Method
Year- Calculation Depreciation
/Year
Accumulated
Depreciation
Residual Value
1 100%
5
× 2 × IDR 1.000.000 IDR 400.000 IDR 400.000 IDR 600.000
2 100%
5
× 2 × IDR 600.000 IDR 240.000 IDR 640.000 IDR 360.000
3 100%
5
× 2 × IDR 360.000 IDR 144.000 IDR 784.000 IDR 216.000
4 100%
5
× 2 × IDR 216.000 IDR 86.400 IDR 870.400 IDR 129.600
5 − IDR 29.600 IDR 900.000 IDR 100.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

7. Exercise No. 1
Production Method
Year- Calculation Depreciation
/Year
Accumulated
Depreciation
Residual Value
1 40.000
100.000
× IDR 900.000 IDR 360.000 IDR 360.000 IDR 640.000
2 25.000
100.000
× IDR 900.000 IDR 225.000 IDR 585.000 IDR 415.000
3 20.000
100.000
× IDR 900.000 IDR 180.000 IDR 765.000 IDR 235.000
4 10.000
100.000
× IDR 900.000 IDR 90.000 IDR 855.000 IDR 145.000
5 5.000
100.000
× IDR 900.000
IDR 45.000 IDR 900.000 IDR 100.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

8. Exercise
2. An asset values IDR 4.000.000 is estimated having 4 years economic life and
10% residual value. Calculate the depreciation per year by using straight line
method, Sum of the years digit method, and double declining method!
Apply the production method to calculate the depreciation assuming the
estimated production during 4 years are 500 units, 300 units, 150 units, dan 50
units!
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

9. Exercise No. 2
Straight Line Method
–
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
𝑌𝑒𝑎𝑟
=
𝐼𝐷𝑅 4.000.000 −𝐼𝐷𝑅 400.000
4 𝑦𝑒𝑎𝑟𝑠
= 𝐼𝐷𝑅 900.000/𝑦𝑒𝑎𝑟
Year- Depreciation/Year Accumulated
Depreciation
Residual Value
1 IDR 900.000 IDR 900.000 IDR 3.100.000
2 IDR 900.000 IDR 1.800.000 IDR 2.200.000
3 IDR 900.000 IDR 2.700.000 IDR 1.300.000
4 IDR 900.000 IDR 3.600.000 IDR 400.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

10. Exercise No. 2
Sum of the Years Digit Method
Year- Tariff x Basic of Depreciation Depreciation/
Year
Accumulated
Depreciation
Residual Value
1 4
10
× (IDR 4.000.000 − IDR 400.000)
IDR 1.440.000 IDR 1.440.000 IDR 2.560.000
2 3
10
× (IDR 4.000.000 − IDR 400.000)
IDR 1.080.000 IDR 2.520.000 IDR 1.480.000
3 2
10
× (IDR 4.000.000 − IDR 400.000)
IDR 720.000 IDR 3.240.000 IDR 760.000
4 1
10
× (IDR 4.000.000 − IDR 400.000)
IDR 360.000 IDR 3.600.000 IDR 400.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

11. Exercise No. 2
Double Declining Method
Year- Calculation Depreciation/
Year
Accumulated
Depreciation
Residual Value
1 100%
4
× 2 × IDR 4.000.000 IDR 2.000.000 IDR 2.000.000 IDR 2.000.000
2 100%
4
× 2 × IDR 2.000.000 IDR 1.000.000 IDR 3.000.000 IDR 1.000.000
3 100%
4
× 2 × IDR 1.000.000 IDR 500.000 IDR 3.500.000 IDR 500.000
4 − IDR 100.000 IDR 3.600.000 IDR 400.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods

12. Exercise No. 2
Production Method
Year- Calculation Depreciation/
Year
Accumulated
Depreciation
Residual Value
1 500
1.000
× IDR 3.600.000 IDR 1.800.000 IDR 1.800.000 IDR 2.200.000
2 300
1.000
× IDR 3.600.000 IDR 1.080.000 IDR 2.880.000 IDR 1.120.000
3 150
1.000
× IDR 3.600.000 IDR 540.000 IDR 3.420.000 IDR 580.000
4 50
1.000
× IDR 3.600.000 IDR 180.000 IDR 3.600.000 IDR 400.000
RiriAriyanty,MM.|FinancialAccounting–PPEDepreciationMethods