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Calculate how much depreciation will be charged

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Reference no: EM132822239

Question - Deep Oil Inc. bought a drilling rig on 1st January 2021 for £210,000,000 and plan to sell it for £90,000,000 after 15 years for

a. Using the straight line method, calculate how much depreciation will be charged to Deep Oil Inc. Income Statement every year. [Please Show the workings and how the drilling rig will be depreciated every year. Please Kindly Make sure to use ruler on all your lines]

b. What will be the value of the drilling rig at the end of this year (2021) and at the end of next year (2022)?

c. A colleague of yours, in the accounts department, has calculated that the value of the drilling rig at the end of year 9 will be £132,000,000. Are your colleague's calculations right? Please Justify the answer by showing the value of the drilling rig at the end of the 9th year.

d. Kindly Explain what impact depreciation has on the Income Statement and in the Balance Sheet.

Reference no: EM132822239

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