Baker Co purchased an asset for $1,600,000 on 1.1.X1. It had an estimated useful life of 5 yers and it was depreciated using the reducing balance method at a rate of 40%. On 1.1.X3 it was decided to change the method to straight line.
What is the carrying amount of the asset at 31.12.X3?
SUGGESTED SOLUTIONS:
| YEAR | COST | ANNUAL DEPRECIATION | CARRYING AMOUNT |
| X1 | 1,600,000 | 640,000 | 960,000 |
| X2 | 960,000 | 384,000 | 576,000 |
| X3 | 576,000 | 192,000 | 384,000 |
WORKING : Annual depreciation using straight line
=576,000 / 3
=192,000