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NSWMaths Standard 2Quick questions

Year 12: Financial Mathematics

Quick questions on Straight-line and declining-balance depreciation for HSC Maths Standard 2

10short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.

What is straight-line depreciation?
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The asset loses a fixed dollar amount each year. The value after nn years is
What is declining-balance depreciation?
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The asset loses a fixed percentage of its current value each year. After nn years:
What is book value vs market value?
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These formulas give the book value (what the asset is recorded as on the balance sheet). Market value (resale value) can differ, and the question will usually be explicit about which is asked.
What is comparing values at a given year?
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Plot or tabulate the two methods side by side. Declining balance gives higher book value early on but never reaches zero. Straight-line gives a constant drop and hits salvage on schedule.
What is same vehicle on straight-line?
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Estimate useful life of 88 years with salvage value \8000$.
What is office computer?
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A \2400laptopona laptop on a 40\%$ declining-balance rate.
What is forgetting salvage value in straight-line?
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Annual depreciation is P−Sn\frac{P - S}{n}, not Pn\frac{P}{n}. Skipping salvage gives a value that drops below the salvage at year nn.
What is letting straight-line go negative?
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Beyond year nendn_{\text{end}}, the asset is at salvage; do not extrapolate to negative values.
What is mixing methods?
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Choose one method per question. The HSC will specify which is being used.
What is confusing depreciation rate with interest rate?
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Declining-balance depreciation has the same formula as compound interest but with the multiplier less than 11. :::

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