ABSTRACT
Space for answer £’000
Cost Year 1 Depreciation
Net book value, end of year 1 Year 2 Depreciation
Net book value, end of year 2 Year 3 Depreciation
Net book value, end of year 3 Year 4 Depreciation
Net book value, end of year 4 Year 5 Depreciation
Net book value, end of year 5 Year 6 Depreciation
Net book value, end of year 6
7.3 Potter Press Limited: Changing from straight line to declining balance Potter Press Limited is considering changing from the straight line method of depreciation to the declining balance method. Neither residual values nor estimated asset lives would change, but the percentage depreciation rate would be doubled. Assuming that Potter Press expects to replace its existing fixed assets fairly regularly over a ten-year cycle without marked fluctuations from year to year, how would you expect such a change to affect the company’s accounts?
