Baker Corporation acquired, for an installed cost of $40,000, a machine having a recovery period of 5 years. Using the applicable percentages from Table 3.2, Baker calculates the depreciation in each year as follows:
|
|
Percentages |
Depreciation |
|
Cost |
(from Table 3.2) |
[(1) x (2)] |
Year |
(1) |
(2) |
(3) |
1 |
$40,000 |
20% |
$ 8,000 |
2 |
40,000 |
32 |
12,800 |
3 |
40,000 |
19 |
7,600 |
4 |
40,000 |
12 |
4,800 |
5 |
40,000 |
12 |
4,800 |
6 |
40,000 |
5 |
2,000 |
Totals |
|
100% |
$40,000 |
Column 3 shows that the full cost of the asset is written off over 6 recovery years.