Depreciation - Worked Examples

Example 1 — Straight-line depreciation: basis PHP 1.8M, salvage PHP 300k, life 5 years.

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Example 2 — Find book value after 3 years for Example 1.

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Example 3 — Distinguish book and market value: year-3 book value is PHP 900k but a dealer offers PHP 1.05M.

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Example 4 — DDB year-1 depreciation for basis PHP 2.0M, life 5 years.

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Example 5 — DDB year-2 depreciation for Example 4, before a salvage floor is reached.

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Example 6 — SYD year-1 depreciation: basis PHP 1.5M, salvage PHP 300k, life 4 years.

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Example 7 — SYD year-3 depreciation for Example 6.

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Example 8 — Cumulative straight-line depreciation after 6 years: basis PHP 3.2M, salvage PHP 800k, life 8 years.

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Example 9 — Explain the cash-flow effect of PHP 400k depreciation with a 25% illustrative tax rate and positive taxable income.

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Example 10 — A machine is fully operational but has low book value. Does low book value prove replacement is economical?

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Example 11 — Pure DDB with basis PHP 2.0M, life 5 years, and salvage floor PHP 100k. Does the fixed 40% DDB rate end exactly at salvage after year 5?

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Example 12 — One-year generic DDB edge case: basis PHP 500k, salvage floor PHP 100k, life 1 year.

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