### FINANCIAL ACCOUNTING

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
A delivery truck cost RM10, 000 and has an estimated residual value of RM1, 000 at the end of its estimated useful life of five years, the annual depreciation charge according to straight line method is ____
 A RM10, 000 B RM9, 000 C RM2, 000 D RM1, 800
Explanation:

Detailed explanation-1: -Annual Depreciation = (Cost of the Fixed Asset-Residual Value) ÷ The Useful Life of the Asset in Years. You can also find a depreciation rate by multiplying the book value of an item by the depreciation rate, where the book value equals the cost of the item, minus the accumulated depreciation.

Detailed explanation-2: -So, if the asset is expected to last for five years, the sum of the years’ digits would be calculated by adding 5 + 4 + 3 + 2 + 1 to get the total of 15. Each digit is then divided by this sum to determine the percentage by which the asset should be depreciated each year, starting with the highest number in year 1.

Detailed explanation-3: -Residual = actual y value − predicted y value . Having a negative residual means that the predicted value is too high, similarly if you have a positive residual it means that the predicted value was too low. The aim of a regression line is to minimise the sum of residuals.

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