Lesson 7: Depreciation and Financial Decision Making

Year 10 Mathematics Unit 1 — Block A | Worksheet



Multiple Choice

Q1. A machine costing $20,000 has a scrap value of $4,000 after 8 years. What is the annual straight-line depreciation?

A) $2,500 B) $2,000 C) $2,400 D) $1,600

Q2. A car purchased for $35,000 depreciates by 20% p.a. using reducing balance. What is its value after 1 year?

A) $28,000 B) $27,000 C) $30,000 D) $15,000

Q3. Which depreciation method gives a higher book value after 3 years for an asset costing $10,000 with 25% p.a. depreciation?

A) Straight-line B) Reducing balance C) They are equal D) Cannot determine

Q4. An asset with a book value of $8,000 is depreciated straight-line over 5 years to a scrap value of $1,000. What is the book value after 2 years?

A) $6,200 B) $5,600 C) $6,400 D) $4,800

Q5. A business must choose between Machine A ($12,000, 5-year life, $2,000 scrap) and Machine B ($10,000, 4-year life, $1,000 scrap). Which has lower annual straight-line depreciation?

A) Machine A by $500 B) Machine B by $250 C) Machine A by $250 D) They are equal

Short Answer

Q6. A computer system costs $4,800 and is depreciated straight-line to zero over 6 years. Calculate the annual depreciation and the book value after 4 years. (2 marks)

Q7. A vehicle purchased for $32,000 depreciates at 18% p.a. using reducing balance. Calculate its value after 3 years, to the nearest dollar. (3 marks)

Q8. Compare straight-line and reducing balance depreciation for an asset costing $15,000 with a 5-year life and no scrap value. Which method is better for a business wanting to maximise early tax deductions? Explain. (3 marks)

Key Formulas