1
State which depreciation method will be the most appropriate in the case of each of the
following assets and why. Also, indicate to what extent obsolescence will affect each of the assets.
(a) A delivery van used by a baker.
(b) A filing cabinet.
(c) A shop held on a 20-year lease.
(d) A plastic moulding machine to manufacture a new novelty – plastic fireguards. It is expected
that these will be very popular next Christmas and that sales will continue for a year of two
thereafter but at a very much lower level.
(e) Machine X. This machine is used as a standby when the normal machines are being maintained.
Occasionally it is used to increase capacity when there is a glut of orders. Machine X is of an old
type and is inefficient compared with new machines. When used on a full-time basis, the
machine should last for approximately four years.