Durable Asset

In: Business and Management

Submitted By Kishore
Words 1045
Pages 5
DURABLE ASSET VALUATION
We have assumed that we have bought a car for Tk. 1 crore. We plan to utilize this fixed asset for the next 10 years, with a resale price of Tk. 10 lacs, with an annual depreciation of Tk. 9 lacs (10%), which we have calculated by {(Cost-Resale Value)/(No. of useful life)}. The depreciable cost of this asset was found by subtracting the cost of the car by the resale value, which gives us the opportunity to spread the total depreciable cost of Tk. 90 lacs over a period of the number of years we are planning to hold, which equals to 10 years.
Table 1 Computation | | End of year | Year | Depreciable Cost(a) in Tk. | Depreciation Rate(b) | Annual Depreciation Expense(a*b) in Tk. | Accumulated Depreciation in Tk. | Book Value in Tk. | 2012 | 9000000 | 10% | 900000 | 900000 | 9100000 | 2013 | 9000000 | 10% | 900000 | 1800000 | 8200000 | 2014 | 9000000 | 10% | 900000 | 2700000 | 7300000 | 2015 | 9000000 | 10% | 900000 | 3600000 | 6400000 | 2016 | 9000000 | 10% | 900000 | 4500000 | 5500000 | 2017 | 9000000 | 10% | 900000 | 5400000 | 4600000 | 2018 | 9000000 | 10% | 900000 | 6300000 | 3700000 | 2019 | 9000000 | 10% | 900000 | 7200000 | 2800000 | 2020 | 9000000 | 10% | 900000 | 8100000 | 1900000 | 2021 | 9000000 | 10% | 900000 | 9000000 | 1000000 |

How would you determine this value?
We managed to get the value of Tk. 1 crore for the car based on the current price of the car in the market.
What is the resale value?
Resale value is the price at which we are expecting to sell the car in the future once we have decided to discontinue using this fixed asset. This is basically the value at which we would be able to sell the car 10 years from now. The resale value in our case is Tk. 10 lacs.
What is the replacement value?
Replacement value is the cost of acquiring a new asset to replace an existing asset with the same…...

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