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E.2 Muscat chocolates Company purchases equipment on January 1, 2017, at a cost of OMR 100000. The asset is expected to have a service life
E.2 Muscat chocolates Company purchases equipment on January 1, 2017, at a cost of OMR 100000. The asset is expected to have a service life of 4 years and a residual value of OMR 20000 Instructions: (a) Calculate the annual rate of depreciation. Amount of depreciation for each from 2017 to 2019 using the straight-line depreciation method [4 Marks) (b) Calculate the amount of depreciation for each from 2017 to 2019 using the reducing balance method. 3 Marks (c) What would be the difference in the depreciation expense for the year ending 31st December 2019 based on using either the straight-line method or the reducing balance method 11 Mark) (d) on what basis should management select from these two methods to depreciate the machine? Justify in your own words [1 mark] (e) What do you feel may be the difference between these two methods of computing depreciation? Explain in your own words [1 mark]
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